Delaware | |
(State or Other Jurisdiction of Incorporation or Organization) | 22-1684144 (I.R.S. Employer Identification No.) |
3301 Electronics Way, West Palm Beach, Florida | |
(Address of Principal Executive Offices) | 33407 (Zip Code) |
Non-accelerated filer ☐ Smaller reporting company ☒ Emerging growth company ☐ |
Page No. | Page No. | ||||||
Financial Statements | |||||||
Balance Sheets | 3 | ||||||
August 31, 2020 (unaudited) and February 29, 2020 | |||||||
Statements of Operations (unaudited) | 4 | ||||||
Three and Six Months Ended August 31, 2020 and 2019 | |||||||
Statements of Stockholders’ Equity (unaudited) Three and Six Months Ended August 31, 2020 and 2019 | 5 | ||||||
Statements of Cash Flows (unaudited) | 6 | ||||||
Six Months Ended August 31, 2020 and 2019 | |||||||
Notes to Financial Statements (unaudited) | 7 | ||||||
Management’s Discussion and Analysis of Financial Condition and | |||||||
Results of Operations | 17 | ||||||
Quantitative and Qualitative Disclosures About Market Risk | 21 | ||||||
Controls and Procedures | 21 | ||||||
PART II – OTHER INFORMATION | |||||||
Legal Proceedings | 22 | ||||||
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Risk Factors | 22 | ||||||
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Unregistered Sales of Equity Securities and Use of Proceeds | 22 | ||||||
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Exhibits | 22 | ||||||
23 | |||||||
SOLITRON DEVICES, INC. | SOLITRON DEVICES, INC. | SOLITRON DEVICES, INC. | ||
BALANCE SHEETS | ||||
AS OF AUGUST 31, 2020 AND FEBRUARY 29, 2020 | ||||
(In thousands except for share and per share amounts) | ||||
BALANCE SHEETS | BALANCE SHEETS | |||
AS OF MAY 31, 2021 AND FEBRUARY 28, 2021 | AS OF MAY 31, 2021 AND FEBRUARY 28, 2021 | |||
(in thousands, except for share and per share amounts) | (in thousands, except for share and per share amounts) | |||
August 31, 2020 | February 29, 2020 | May 31, 2021 | February 28, 2021 | |
(unaudited) | (unaudited) | |||
ASSETS | ||||
CURRENT ASSETS | ||||
Cash and cash equivalents | $2,819 | $1,332 | 3,019 | 3,785 |
Securities | 193 | 164 | ||
Marketable securities | 270 | 248 | ||
Accounts receivable | 1,782 | 1,379 | 2,332 | 1,306 |
Inventories, net | 3,168 | 2,870 | 2,627 | 2,721 |
Prepaid expenses and other current assets | 249 | 118 | 393 | 372 |
TOTAL CURRENT ASSETS | 8,211 | 5,863 | 8,641 | 8,432 |
Property, plant and equipment, net | 353 | 405 | 4,805 | 281 |
Operating lease - right-of-use asset | 535 | 723 | 240 | 340 |
Other assets | 44 | 45 | 37 | 40 |
TOTAL ASSETS | $9,143 | $7,036 | 13,723 | 9,093 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
CURRENT LIABILITIES | ||||
Accounts payable | $325 | $269 | 514 | 165 |
Customer deposits | 29 | 53 | 265 | 49 |
Operating lease liability | 437 | 417 | 266 | 377 |
Finance lease liability | 9 | |||
Notes payable (PPP loan) | 92 | 43 | ||
Mortgage loan | 100 | - | ||
Accrued expenses and other current liabilities | 894 | 437 | 960 | 740 |
TOTAL CURRENT LIABILITIES | 1,685 | 1,176 | 2,206 | 1,383 |
Notes payable (PPP Loan) | 807 | - | ||
Operating lease liability | 153 | 377 | ||
Capital lease liability | 17 | - | ||
Notes payable (PPP loan), net of current | 715 | 764 | ||
Mortgage loan, net of current | 2,832 | - | ||
Finance lease liability, net of current | 10 | 13 | ||
TOTAL LIABILITIES | 2,662 | 1,553 | 5,763 | 2,160 |
STOCKHOLDERS’ EQUITY | ||||
Preferred stock, $.01 par value, authorized 500,000 shares, none issued | - | - | ||
Common stock, $.01 par value, authorized 10,000,000 shares, | ||||
2,060,456 shares outstanding, net of 510,807 treasury shares | ||||
at August 31, 2020; 2,062,949 shares outstanding, net of | ||||
508,314 treasury shares at February 29, 2020, respectively | 21 | |||
2,083,462 shares outstanding, net of 487,801 treasury shares | ||||
at May 31, 2021 and February 28, 2021 | 21 | |||
Additional paid-in capital | 1,834 | 1,834 | ||
Retained earnings | 6,113 | 5,109 | ||
Retained Earnings | 7,517 | 6,490 | ||
Less treasury stock | (1,487) | (1,481) | (1,412) | |
TOTAL STOCKHOLDERS’ EQUITY | 6,481 | 5,483 | 7,960 | 6,933 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $9,143 | $7,036 | 13,723 | 9,093 |
SOLITRON DEVICES, INC. | SOLITRON DEVICES, INC. | SOLITRON DEVICES, INC. | ||||
STATEMENTS OF OPERATIONS | ||||||
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | ||||||
STATEMENTS OF OPERATIONS | STATEMENTS OF OPERATIONS | |||||
FOR THE THREE MONTHS ENDED MAY 31, 2021 AND MAY 31, 2020 | FOR THE THREE MONTHS ENDED MAY 31, 2021 AND MAY 31, 2020 | |||||
(Unaudited, in thousands except for share and per share amounts) | (Unaudited, in thousands except for share and per share amounts) | (Unaudited, in thousands except for share and per share amounts) | ||||
For the three months ended | For the six months ended | Fiscal first quarter ended | ||||
August 31, 2020 | August 31, 2019 | August 31, 2020 | August 31, 2019 | May 31, 2021 | May 31, 2020 | |
Net sales | $3,103 | $2,420 | $5,601 | $4,977 | 3,610 | 2,498 |
Cost of sales | 1,978 | 1,958 | 3,620 | 4,324 | 1,946 | 1,642 |
Gross profit | 1,125 | 462 | 1,981 | 653 | 1,664 | 856 |
Selling, general and administrative expenses | 526 | 779 | 1,012 | 1,223 | 714 | 486 |
Operating income (loss) | 599 | (317) | 969 | (570) | ||
Operating income | 950 | 370 | ||||
Other income (loss) | ||||||
Interest income | - | 1 | - | 1 | ||
Interest expense | (20) | - | ||||
Dividend income | 1 | - | 7 | 1 | - | 6 |
Realized gain (loss) on investments | 11 | (4) | 26 | (20) | 27 | 15 |
Unrealized gain (loss) on investments | 24 | - | 2 | 19 | (20) | (22) |
Other, net | 90 | - | ||||
Total other income (loss) | 36 | (3) | 35 | 1 | 77 | (1) |
Net income (loss) | $635 | $(320) | $1,004 | $(569) | ||
Net income | 1,027 | 369 | ||||
Net income per common share-basic and diluted | $0.49 | $0.18 | ||||
Net income (loss) per common share - basic and diluted | $0.31 | $(0.16) | $0.49 | $(0.29) | ||
Weighted average common shares outstanding - basic and diluted | 2,060,457 | 2,013,959 | 2,061,703 | 1,957,959 | ||
Weighted average common shares outstanding | 2,083,462 | 2,062,949 |
SOLITRON DEVICES, INC. | |||||||
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY | |||||||
FOR THE PERIODS ENDED MAY 31, 2021 AND MAY 31, 2020 | |||||||
(Unaudited, in thousands, except for number of shares) | |||||||
Common Stock | Additional | Treasury Stock | |||||
Number | Treasury | Paid-in | Retained | ||||
of Shares | Shares | Amount | Capital | Amount | Earnings | Total | |
Balance, February 29, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,109 | $5,483 |
Net income | - | - | - | - | - | 369 | 369 |
Balance, May 31, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,478 | $5,852 |
Balance, February 28, 2021 | 2,571,263 | (487,801) | $21 | $1,834 | $(1,412) | $6,490 | $6,933 |
Net income | - | - | - | - | - | 1,027 | 1,027 |
Balance, May 31, 2021 | 2,571,263 | (487,801) | $21 | $1,834 | $(1,412) | $7,517 | $7,960 |
SOLITRON DEVICES, INC. | ||
STATEMENTS OF CASH FLOWS | ||
FOR THE THREE MONTHS ENDED MAY 31, 2021 AND MAY 31, 2020 | ||
(Unaudited, in thousands) | ||
2021 | 2020 | |
Net income | $1,027 | 369 |
Adjustments to reconcile net income (loss) | ||
to net cash used in operating activities: | ||
Depreciation and amortization | 59 | 59 |
Operating lease expense | 100 | 93 |
Net realized and unrealized (gains) on investments | (7) | 7 |
Changes in Operating Assets and Liabilities: | ||
Accounts receivable | (1,026) | 79 |
Inventories | 94 | (420) |
Prepaid expenses and other current assets | (21) | (61) |
Other assets | 3 | - |
Payments on operating lease liabilities | (111) | (101) |
Payments on capital lease liabilities | (3) | - |
Accounts payable | 362 | 45 |
Customer deposits | 216 | (29) |
Accrued expenses, other current and non-current liabilities | 207 | 252 |
Net cash provided by operating activities | 900 | 293 |
Investing activities | ||
Proceeds from sale of marketable securities | 88 | 169 |
Purchases of marketable securities | (103) | (222) |
Purchases of property and equipment | (4,583) | (23) |
Net cash (used in) investing activities | (4,598) | (76) |
Financing activities | ||
Proceeds from mortgage loan | 2,940 | - |
Principal payments on mortgage loan | (8) | - |
Net cash provided by financing activities | 2,932 | - |
Net increase in cash and cash equivalents | (766) | 217 |
Cash and cash equivalents - beginning of the year | 3,785 | 1,332 |
Cash and cash equivalents - end of period | $3,019 | 1,549 |
SOLITRON DEVICES, INC. | |||||||
STATEMENTS OF STOCKHOLDERS’ EQUITY | |||||||
FOR THE THREE AND SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | |||||||
(Unaudited, In thousands, except for number of shares) | |||||||
Common Stock | Additional | ||||||
Number | Treasury | Paid-in | Treasury Stock | Retained | |||
of Shares | Shares | Amount | Capital | Amount | Earnings | Total | |
Balance, February 28, 2019 | 2,571,263 | (669,304) | $19 | $1,834 | $(1,761) | $5,806 | $5,898 |
Adjustment for Adoption of ASC 842 | - | - | - | - | - | (91) | (91) |
Net loss | - | - | - | - | - | (249) | (249) |
Balance, May 31, 2019 | 2,571,263 | (669,304) | $19 | $1,834 | $(1,761) | $5,466 | $5,558 |
Stock based Compensation | - | 161,000 | 2 | - | 280 | - | 282 |
Net loss | - | - | - | - | - | (320) | (320) |
Balance, August 31, 2019 | 2,571,263 | (508,304) | $21 | $1,834 | $(1,481) | $5,146 | $5,520 |
Balance, February 29, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,109 | $5,483 |
Net income | - | - | - | - | - | 369 | 369 |
Balance, May 31, 2020 | 2,571,263 | (508,314) | $21 | $1,834 | $(1,481) | $5,478 | $5,852 |
Purchase of Common Stock | - | (2,493) | - | - | (6) | - | (6) |
Net income | - | - | - | - | - | 635 | 635 |
Balance, August 31, 2020 | 2,571,263 | (510,807) | $21 | $1,834 | $(1,487) | $6,113 | $6,481 |
SOLITRON DEVICES, INC. | ||
STATEMENTS OF CASH FLOWS | ||
FOR THE SIX MONTHS ENDED AUGUST 31, 2020 AND AUGUST 31, 2019 | ||
(Unaudited, in thousands) | ||
For the six months ended | For the six months ended | |
August 31, 2020 | August 31, 2019 | |
Net income (loss) | $1,004 | $(569) |
Adjustments to reconcile net income (loss) | ||
to net cash provided by operating activities: | ||
Depreciation and amortization | 119 | 108 |
Operating lease expense | 188 | 185 |
Net realized and unrealized losses (gains) on investments | (28) | 1 |
Stock based compensation | - | 282 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (403) | 152 |
Inventories | (298) | 909 |
Prepaid expenses and other current assets | (131) | (35) |
Other assets | 1 | |
Payments on operating lease liabilities | (204) | (186) |
Accounts payable | 54 | (303) |
Customer deposits | (24) | 33 |
Accrued expenses and other current and non-current liabilities | 448 | (103) |
Net cash provided by operating activities | 726 | 474 |
Investing activities | ||
Proceeds from sale of securities | 272 | 45 |
Purchases of securities | (272) | (32) |
Purchases of property and equipment | (40) | (68) |
Net cash (used in) investing activities | (40) | (55) |
Financing activities | ||
Proceeds from SBA Paycheck Protection Program loan | 807 | - |
Purchase of treasury stock | (6) | - |
Net cash provided by financing activities | 801 | - |
Net increase in cash and cash equivalents | 1,487 | 419 |
Cash and cash equivalents - beginning of the year | 1,332 | 394 |
Cash and cash equivalents - end of period | $2,819 | $813 |
Non-cash transactions | ||
Capitalization of ROU asset and liability | 26 | 1,081 |
Adjustment for Adoption of ASC 842 | - | (91) |
August 31, 2020 | Gross | |||||||
May 31, 2021 | Gross | |||||||
Marketable Securities: | Cost | Unrealized Gains | Unrealized Losses | Fair Value | Cost | Unrealized Gains | Unrealized Losses | Fair Value |
Common Stocks | 200 | 15 | (22) | 193 | 229 | 54 | (13) | 270 |
February 28, 2021 | Gross | |||||||
Marketable Securities: | Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||
Common Stocks | 224 | 46 | (22) | 248 |
February 29, 2020 | Gross | Gross | ||
Marketable Securities: | Cost | Unrealized Gains | Unrealized Losses | Fair Value |
Common Stocks | 155 | 16 | (7) | 164 |
August 31, 2020 | August 31, 2019 | May 31, 2021 | May 31, 2020 | |
Beginning Balance | $261,000 | $72,000 | $354,000 | $126,000 |
Accrued Allowances | 64,000 | 14,000 | 92,000 | 135,000 |
Credits Issued | - | - | ||
Ending Balance | $325,000 | $86,000 | $446,000 | $261,000 |
August 31, 2020 | February 29, 2020 | May 31, 2021 | February 28, 2021 | |
Raw Materials | $899,000 | $766,000 | $770,000 | $842,000 |
Work-In-Process | 2,164,000 | 2,058,000 | 1,827,000 | 1,830,000 |
Finished Goods | 105,000 | 46,000 | 30,000 | 49,000 |
Totals | $3,168,000 | $2,870,000 | $2,627,000 | $2,721,000 |
August 31, 2020 | February 29, 2020 | May 31, 2021 | February 28, 2021 | |
Payroll and related employee benefits | $337,000 | $303,000 | $313,000 | $293,000 |
Legal fees | 1,000 | - | - | 3,000 |
Property taxes | 22,000 | 8,000 | ||
Property, Sales, and Franchise taxes | 24,000 | 15,000 | ||
Return Allowance | 325,000 | 126,000 | 446,000 | 354,000 |
Bonus Accrual | 200,000 | - | 170,000 | 70,000 |
Other liabilities | 9,000 | - | ||
Accrued Interest on PPP loan | 7,000 | 5,000 | ||
Totals | $894,000 | $437,000 | $960,000 | $740,000 |
Geographic Region | August 31, 2020 | August 31, 2019 |
Europe and Australia | - | - |
Canada and Latin America | 7,000 | - |
Far East and Middle East | - | - |
United States | 3,096,000 | 2,420,000 |
Totals | $3,103,000 | $2,420,000 |
Geographic Region | August 31, 2020 | August 31, 2019 | May 31, 2021 | May 31, 2020 |
Europe and Australia | - | - | ||
Canada and Latin America | 13,000 | 4,000 | 15,000 | 6,000 |
Far East and Middle East | 9,000 | - | - | 9,000 |
United States | 5,579,000 | 4,973,000 | 3,595,000 | 2,483,000 |
Totals | $5,601,000 | $4,977,000 | $3,610,000 | $2,498,000 |
Customer | August 31, 2020 | August 31, 2019 |
Raytheon | 60% | 55% |
Avnet / USI Electronics | 12% | 17% |
Totals | 72% | 72% |
Customer | May 31, 2021 |
Raytheon | 53% |
Honeywell | 11% |
Avnet / USI Electronics | 14% |
Totals | 78% |
Customer | August 31, 2020 | August 31, 2019 |
Raytheon | 56% | 56% |
Avnet / USI Electronics | 18% | 14% |
Totals | 74% | 70% |
Customer | May 31, 2020 |
Raytheon | 51% |
Avnet / USI Electronics | 26% |
Totals | 77% |
Balance Sheet Classification | May 31, 2021 |
Assets | |
Operating lease right-of-use assets, March 1, 2021 | $340,000 |
Amortization for the three months ended May 31, 2021 | (100,000) |
Total operating lease right-of-use asset, May 31, 2021 | $240,000 |
Liabilities | |
Current | |
Operating lease liability, short-term | $266,000 |
Non-current | |
Operating lease liability, long-term | - |
Total lease liabilities | $266,000 |
Fiscal Year Ending February 28 | Amount |
2022 | 272,000 |
Total Future Undiscounted Cash Flows | $272,000 |
Less Imputed Interest to be recognized in lease expense | 6,000 |
Operating Lease Liabilities, as reported | $266,000 |
Balance Sheet Classification | |
Assets | |
Operating lease right-of-use assets, March 1, 2020 | $723,000 |
Amortization for the | ( |
Total operating lease right-of-use asset, | $ |
Liabilities | |
Current | |
Operating lease liability, short-term | $ |
Non-current | |
Operating lease liability, long-term | |
Total lease liabilities | $ |
Fiscal Year Ending February 28/29 | Amount | |
2021 | 228,000 | |
Fiscal Year Ending February 28 | Amount | |
2022 | 388,000 | 388,000 |
Total Future Undiscounted Cash Flows | $616,000 | $388,000 |
Less Imputed Interest to be recognized in lease expense | 26,000 | 11,000 |
Operating Lease Liabilities, as reported | $590,000 | $377,000 |
Fiscal Year Ending February 28/29 | Amount |
2021 | 454,000 |
2022 | 388,000 |
Total Future Undiscounted Cash Flows | $842,000 |
Less Imputed Interest to be recognized in lease expense | 48,000 |
Operating Lease Liabilities, as reported | $794,000 |
Period | Total Number of Shares Purchased | Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) |
June 1, 2020 – June 30, 2020 | 2,493 | $2.30 | $994 |
July 1, 2020 – July 31, 2020 | $ | $ | |
August 1, 2020 – August 31, 2020 | $ | $ | |
Total | 2,493 |
Commercial Contract, dated | ||
Master Credit Agreement, dated as of April 15, 2021, between Solitron Devices, Inc. and Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 21, 2021). | ||
Note, dated as of April 15, 2021, between Solitron Devices, Inc. and Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on April 21, 2021). | ||
Mortgage, Assignment of Rents, Security Agreement and Fixture Filing, dated as of April 15, 2021, between Solitron Devices, Inc. to Bank of America, N.A. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on April 21, 2021). | ||
Financial Covenant Agreement, dated as of April 15, 2021, between Solitron Devices, Inc. and Bank of America, N.A. (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on April 21, 2021). | ||
Certification of Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** | ||
Certification of Chief Executive Officer and Interim Chief Financial Officerpursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Label Linkbase | |
101.PRE* | XBRL Taxonomy Presentation Linkbase | |
* Filed herewith | ||
** Furnished herewith | ||
SOLITRON DEVICES, INC. | |||
Date: | By: | /s/ Tim Eriksen | |
Tim Eriksen | |||
Chief Executive Officer, and Interim Chief Financial Officer |
EXHIBIT NUMBER | DESCRIPTION | |
Certification of Chief Executive Officer and Interim Chief Financial Officer | ||
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.** | ||
Certification of Chief Executive Officer and Interim Chief Financial Officer | ||
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | ||
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* XBRL Taxonomy Extension Definition Linkbase | ||
101.LAB* | XBRL Taxonomy Label Linkbase | |
101.PRE* | XBRL Taxonomy Presentation Linkbase | |
* Filed herewith | ||
** Furnished herewith |