SOLITRON DEVICES INC

Previous wording

Net Sales. Net sales for the six months ended August 31, 2024, increased 63% to $7,548,000 as compared to $4,617,000 for the six months ended August 31, 2023. The increase in net sales was largely due to the acquisition of MEI.

Current wording

Net Sales. Net sales for the three months ended November 30, 2024, decreased 19% to $3,369,000 as compared to $4,136,000 for the three months ended November 30, 2023. The decrease in net sales was largely due a lower backlog at the beginning of the third quarter, along with a delay of an expected order.

Previous wording

Net bookings for the three months ended August 31, 2024, decreased 21% to $1,752,000 versus $2,231,000 during the three months ended August 31, 2023 due to the variable timing on the receipt of orders. Backlog as of August 31, 2024, decreased 14% to $7,572,000 as compared to a backlog of $8,785,000 as of August 31, 2023.

Current wording

Net bookings for the three months ended November 30, 2024, increased 66% to $8,049,000 versus $4,842,000 during the three months ended November 30, 2023 due to the variable timing on the receipt of orders. Backlog as of November 30, 2024, decreased 5% to $12,277,000 as compared to a backlog of $12,986,000 as of November 30, 2023.

Previous wording

*Gross Profit.*Gross profit for the three months ended August 31, 2024, decreased to $738,000 from $897,000 for the three months ended August 31, 2023, due to increased costs noted above. Accordingly, gross margins expressed as a percentage of net sales decreased to 21% for the three months ended August 31, 2024, as compared to 35% for the three months ended August 31, 2023.

Current wording

*Gross Profit.*Gross profit for the three months ended November 30, 2024, decreased slightly to $1,001,000 from $1,077,000 for the three months ended November 30, 2023. However, gross margins expressed as a percentage of net sales increased to 30% for the three months ended November 30, 2024, as compared to 26% for the three months ended November 30, 2023.

Previous wording

For the three months ended August 31, 2024, we shipped 16,120 units as compared to 19,134 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.

Current wording

For the three months ended November 30, 2024, we shipped 13,675 units as compared to 20,733 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.

Previous wording

Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $688,000 for the three months ended August 31, 2024 from $614,000 for the same period in the prior year. The increase was primarily due to intangible amortization of $52,000 related to the acquisition of MEI. During the three months ended August 31, 2024, selling, general and administrative expenses as a percentage of net sales was 19% as compared to 24% for the three months ended August 31, 2023.

Current wording

Selling, General & Administrative Expenses. Selling, general, and administrative expenses decreased to $675,000 for the three months ended November 30, 2024 from $859,000 for the same period in the prior year. The decrease was primarily due tolegal fees incurred in the prior year related to the acquisition of MEI. During the three months ended November 30, 2024, selling, general and administrative expenses as a percentage of net sales was 20% as compared to 21% for the three months ended November 30, 2023.

Previous wording

*Operating Income.*Operating income for the three months ended August 31, 2024, decreased to $50,000 as compared to operating income of $283,000 for the three months ended August 31, 2023. This decrease is due primarily to increased cost of sales as described above.

Current wording

*Operating Income.*Operating income for the three months ended November 30, 2024, increased to $326,000 as compared to operating income of $218,000 for the three months ended November 30, 2023. This increase is due primarily to the reduction of selling, general and administrative expenses as noted above.

Previous wording

Other Income (Loss). Interest income decreased to $1,000 for the three months ended August 31, 2024, as compared to $6,000 for the three months ended August 31, 2023. Interest expense increased to ($77,000) for the three months ended August 31, 2024, as compared to $(26,000) for the three months ended August 31, 2023. Dividend income decreased to $6,000 for the three months ended August 31, 2024, as compared to $18,000 for the three months ended August 31, 2023. Realized gains on investments for the three months ended August 31, 2024, decreased to $22,000 as compared to $210,000 for the three months ended August 31, 2023. Unrealized gains (losses) on investments for the three months ended August 31, 2024, were $21,000 due to market price changes in the company’s common stock investments as compared to a loss of ($291,000) for the three months ended August 31, 2023.

Current wording

Other Income (Loss). Interest income decreased to $0 for the three months ended November 30, 2024, as compared to $12,000 for the three months ended November 30, 2023. Interest expense increased to ($67,000) for the three months ended November 30, 2024, as compared to ($55,000) for the three months ended November 30, 2023. Dividend income increased to $12,000 for the three months ended November 30, 2024, as compared to $0 for the three months ended November 30, 2023. Realized gains on investments for the three months ended November 30, 2024, increased to $13,000 as compared to $0 for the three months ended November 30, 2023. Unrealized gains (losses) on investments for the three months ended November 30, 2024, were $78,000 due to market price changes in the company’s common stock investments as compared to a loss of ($108,000) for the three months ended November 30, 2023.

Previous wording

*Income Taxes.*Income taxes for the three months ended August 31, 2024, increased to $6,000 as compared to $0 for the three months ended August 31, 2023.

Current wording

*Income Taxes.*Income taxes for the three months ended November 30, 2024, increasedto$96,000 as compared to $0 for the three months ended November 30, 2023. This increase is due to the company being profitable in the quarter and to no longer maintaining a valuation allowance on its deferred tax assets.

Previous wording

*Net Income (Loss).*Net income (loss) for the three months ended August 31, 2024, decreased to $17,000 as compared to net income of $200,000 for the three months ended August 31, 2023. This decrease is primarily due to increased cost of sales in the quarter ended August 31, 2024, as noted above.

Current wording

*Net Income (Loss).*Net income (loss) for the three months ended November 30, 2024, increased to $266,000 as compared to net income of $86,000 for the three months ended November 30, 2023. This increase is due primarily to the acquisition of MEI.

Previous wording

Results of Operations-Six Months Ended August 31, 2024, Compared to Six Months Ended August 31, 2023:

Current wording

Results of Operations-Nine Months Ended November 30, 2024, Compared to Nine Months Ended November 30, 2023:

Previous wording

Net Sales. Net sales for the three months ended August 31, 2024, increased 39% to $3,581,000 as compared to $2,579,000 for the three months ended August 31, 2023. The increase in net sales was largely due to the acquisition of MEI.

Current wording

Net Sales. Net sales for the nine months ended November 30, 2024, increased 25% to $10,917,000 as compared to $8,753,000 for the nine months ended November 30, 2023. The increase in net sales was largely due to the acquisition of MEI during the third quarter of fiscal year 2024.

Previous wording

Net bookings for the six months ended August 31, 2024, decreased 34% to $3,780,000 versus $5,769,000 during the six months ended August 31, 2023. Backlog as of August 31, 2024, decreased 14% to $7,572,000 as compared to a backlog of $8,785,000 as of August 31, 2023.

Current wording

Net bookings for the nine months ended November 30, 2024, increased 12% to $11,842,000 versus $10,611,000 during the nine months ended November 30, 2023. Backlog as of November 30, 2024, decreased 5% to $12,277,000 as compared to a backlog of $12,986,000 as of November 30, 2023.

Previous wording

Cost of Sales. Cost of sales for the three months ended August 31, 2024, increased to $2,843,000 from $1,682,000 for the three months ended August 31, 2023, due to increased raw materials and labor costs related to increased net sales and the cost to scrap materials due to a plating supplier’s quality issue. Expressed as a percentage of net sales, cost of sales increased to 79% for the three months ended August 31, 2024, from 65% for the three months ended August 31, 2023.

Current wording

Cost of Sales. Cost of sales for the nine months ended November 30, 2024, increased to $7,503,000 from $6,172,000 for the nine months ended November 30, 2023. However, expressed as a percentage of net sales, cost of sales decreased to 69% for the nine months ended November 30, 2024, from 71% for the nine months ended November 30, 2023.

Previous wording

*Gross Profit.*Gross profit for the six months ended August 31, 2024, increased to $2,413,000 from $1,504,000 for the six months ended August 31, 2023, due primarily to increased sales. Gross margins expressed as a percentage of net sales decreased to 32% for the six months ended August 31, 2024, as compared to 33% for the six months ended August 31, 2023.

Current wording

*Gross Profit.*Gross profit for the nine months ended November 30, 2024, increased to $3,414,000 from $2,581,000 for the nine months ended November 30, 2023, due primarily to increased sales. Gross margins expressed as a percentage of net sales increased to 31% for the nine months ended November 30, 2024, as compared to 29% for the nine months ended November 30, 2023.

Previous wording

For the six months ended August 31, 2024, we shipped 38,897 units as compared to 35,145 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.

Current wording

For the nine months ended November 30, 2024, we shipped 52,572 units as compared to 55,878 units shipped during the same period of the prior year. It should be noted that since we manufacture a wide variety of products with an average sales price ranging from a few dollars to several hundred dollars, such periodic variations in our volume of units shipped should not be regarded as a reliable indicator of our performance.

Previous wording

Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $1,571,000 for the six months ended August 31, 2024, from $1,156,000 for the same period in the prior year. The increase was primarily due to SG&A costs at MEI, intangible amortization of $105,000 due to the acquisition of MEI, $63,000 of increased selling expenses, and $63,000 of increased wages. During the six months ended August 31, 2024, and August 31, 2023, selling, general and administrative expenses as a percentage of net sales was 21% and 25%, respectively.

Current wording

Selling, General & Administrative Expenses. Selling, general, and administrative expenses increased to $2,246,000 for the nine months ended November 30, 2024, from $2,015,000 for the same period in the prior year. The increase was primarily due to SG&A costs at MEI along with intangible amortization of $157,000 due to the acquisition of MEI. During the nine months ended November 30, 2024, and November 30, 2023, selling, general and administrative expenses as a percentage of net sales was 21% and 23%, respectively.

Previous wording

*Operating Income.*Operating income for the six months ended August 31, 2024, increased to $842,000 as compared to operating income of $348,000 for the six months ended August 31, 2023. This increase is due primarily to increased sales partially offset by increased cost of sales and increased selling, general and administrative expenses as described above.

Current wording

*Operating Income.*Operating income for the nine months ended November 30, 2024, increased to $1,168,000 as compared to operating income of $566,000 for the nine months ended November 30, 2023. This increase is due primarily to increased sales from the third quarter acquisition of MEI as noted above.

Previous wording

Other Income (Loss). Interest income decreased to $6,000 for the six months ended August 31, 2024, as compared to $20,000 for the six months ended August 31, 2023. Interest expense increased to ($127,000) for the six months ended August 31, 2024, as compared to $(53,000) for the six months ended August 31, 2023. Dividend income increased to $22,000 for the six months ended August 31, 2024, as compared to $19,000 for the six months ended August 31, 2023. Realized gains on investments for the six months ended August 31, 2024 decreased to $33,000 as compared to $332,000 for the six months ended August 31, 2023. Unrealized gains (loss) on investments for the six months ended August 31, 2024, were $48,000 as compared to (loss) of ($637,000) for the six months ended August 31, 2023.

Current wording

Other Income (Loss). Interest income decreased to $6,000 for the nine months ended November 30, 2024, as compared to $32,000 for the nine months ended November 30, 2023. Interest expense increasedto ($194,000) for the nine months ended November 30, 2024, as compared to ($108,000) for the nine months ended November 30, 2023. Dividend income increased to $34,000 for the nine months ended November 30, 2024, as compared to $19,000 for the nine months ended November 30, 2023. Realized gains on investments for the nine months ended November 30, 2024 decreased to $46,000 as compared to $332,000 for the nine months ended November 30, 2023. Unrealized gains (loss) on investments for the nine months ended November 30, 2024, were $126,000 as compared to a (loss) of ($745,000) for the nine months ended November 30, 2023.

Previous wording

*Income Taxes.*Income taxes for the six months ended August 31, 2024, increased to ($218,000) as compared to $0 for the six months ended August 31, 2023. This increase is due to the company being profitable in the six month period and to no longer maintaining a valuation allowance on its deferred tax assets.

Current wording

*Income Taxes.*Income taxes for the nine months ended November 30, 2024, increasedto $314,000 as compared to $0 for the nine months ended November 30, 2023. This increase is due to the company being profitable in the nine-month period and to no longer maintaining a valuation allowance on its deferred tax assets.

Previous wording

*Net Income.*Net income for the six months ended August 31, 2024, increased to $606,000 as compared to net income of $29,000 for the six months ended August 31, 2023. This increase is due primarily to increased operating income due to increased sales and decreased other income (loss).

Current wording

*Net Income.*Net income for the nine months ended November 30, 2024, increased to $872,000 as compared to net income of $115,000 for the nine months ended November 30, 2023. This increase is due primarily to increased sales as a result of the MEI acquisition during fiscal year 2024.

Previous wording

Net cash provided by operating activities was $1,549,000 for the six months ended August 31, 2024, primarily reflecting net income of $606,000, a decrease in accounts receivable of $629,000, an increase in accounts payable of $380,000, depreciation of $277,000, a change in net deferred taxes of $152,000, and amortization of intangibles of $105,000 partially offset by decreased customer deposits of $287,000, a decrease in accrued expenses of $90,000 and an increase in inventories of $89,000.

Current wording

Net cash provided by operating activities was $2,060,000 for the nine months ended November 30, 2024, primarily reflecting net income of $872,000, a decrease in accounts receivable of $1,033,000, depreciation of $420,000, a change in net deferred taxes of $248,000, and amortization of intangibles of $157,000 partially offset by decreased customer deposits of $475,000 and a decrease in accrued expenses of $236,000.

Previous wording

Net cash provided by operating activities was $970,000 for the six months ended August 31, 2023, primarily reflecting net income of $29,000, net realized and unrealized losses of $305,000, a decrease in inventories of $339,000, and depreciation of $244,000 partially offset by an increase in accounts receivable of $168,000 and an increase in prepaid expenses and other assets of $82,000.

Current wording

Net cash provided by operating activities was $1,360,000 for the nine months ended November 30, 2023, primarily reflecting net income of $115,000, a decrease in inventories of $693,000, an increase in accounts payable of $481,000, net realized and unrealized losses on investments of $413,000, and depreciation and amortization of $393,000, partially offset by an increase in accounts receivable of $1,171,000.

Previous wording

Net cash used in investing activities was ($1,767,000) for the six months ended August 31, 2024, principally reflecting $1,762,000 in purchases of property and equipment, $416,000 in purchases of marketable securities, and $89,000 of cash paid for acquisition, contingent consideration, partially offset by proceeds from the sale of marketable securities of $500,000.

Current wording

Net cash used in investing activities was ($1,821,000) for the nine months ended November 30, 2024, principally reflecting $1,788,000 in purchases of property and equipment, $592,000 in purchases of marketable securities, and $88,000 of cash paid for acquisition, contingent consideration, partially offset by proceeds from the sale of marketable securities of $647,000.

Previous wording

Net cash provided by in investing activities was $1,737,000 for the six months ended August 31, 2023, principally reflecting $1,000,000 in maturities of short-term investments and $882,000 in proceeds from the sale of marketable securities offset by $43,000 of purchases of marketable securities and $102,000 in purchases of property and equipment.

Current wording

Net cash used in investing activities was ($815,000) for the nine months ended November 30, 2023, principally reflecting $1,000,000 in maturities of short-term investments and $882,000 in proceeds from the sale of marketable securities offset by $43,000 of purchases of marketable securities and $102,000 in purchases of property and equipment.

Previous wording

Net cash provided by financing activities was $1,304,000 for the six months ended August 31, 2024, reflecting $1,400,000 in proceeds from mortgage loan offset by $61,000 in principal payments on the mortgage loan and $35,000 in payments on finance lease liabilities.

Current wording

Net cash provided by financing activities was $1,271,000 for the nine months ended November 30, 2024, reflecting $1,400,000 in proceeds from mortgage loan offset by $94,000 in principal payments on the mortgage loan and $35,000 in payments on finance lease liabilities.

Previous wording

Net cash used in financing activities was ($56,000) for the six months ended August 31, 2023, reflecting $53,000 in principal payments on the mortgage loan and $3,000 in payments on finance lease liabilities.

Current wording

Net cash used in financing activities was ($83,000) for the nine months ended November 30, 2023, reflecting $80,000 in principal payments on the mortgage loan and $3,000 in payments on finance lease liabilities.

Previous wording

We expect our sole sources of liquidity over the next twelve months to be cash from operations and cash and cash equivalents, if necessary. We anticipate that our capital expenditures required to sustain operations will be approximately $250,000 during the next twelve months and that our cash from operations and cash and cash equivalents, if necessary, will be sufficient to fund these needs for the next twelve months. Available cash and cash equivalents as of September 30, 2024 was approximately $3.0 million.

Current wording

We expect our sole sources of liquidity over the next twelve months to be cash from operations and cash and cash equivalents, if necessary. We anticipate that our capital expenditures required to sustain operations will be approximately$250,000 during the next twelve months and that our cash from operations and cash and cash equivalents, if necessary, will be sufficient to fund these needs for the next twelve months. Available cash and cash equivalents as of December 31, 2024 was approximately$3.6 million.

Previous wording

At August 31, 2024 and February 29, 2024, we had cash and cash equivalents of approximately $3,303,000 and $2,217,000, respectively. The increase for the six months ended August 31, 2024, was primarily due to cash from operating activities.

Current wording

At November 30, 2024 and February 29, 2024, we had cash and cash equivalents of approximately $3,727,000 and $2,217,000, respectively. The increase for the nine months ended November 30, 2024, was primarily due to cash from operating activities.

Previous wording

At August 31, 2024 and February 29, 2024, we had investments in securities of approximately $901,000 and $904,000, respectively.

Current wording

At November 30, 2024 and February 29, 2024, we had investments in securities of approximately $1,023,000 and $904,000, respectively.

Previous wording

At August 31, 2024 and February 29, 2024, we had working capital of $8,475,000 and $6,227,000, respectively. The increase for the six months ended August 31, 2024 was due primarily to termination of the finance lease liability due to purchasing the property and cash provided in financing activities.

Current wording

At November 30, 2024 and February 29, 2024, we had working capital of $8,882,000 and $6,227,000, respectively. The increase for the nine months ended November 30, 2024 was due primarily to termination of the finance lease liability due to purchasing the property and cash provided in operating activities.