Pink Sheets

Solitron Devices (website) Makes military and aerospace semiconductors (bipolar and MOS). 93% US Government (mostly through contractors such as Raytheon, Lockheed Martin, Smith Ind, harris, Northrup Grumman), the rest are still military related. Ground radar, airborne radar, power dist, missles, missle control, spacecraft (manned and unmanned).

2005 10-K
period ending Feb 28, 2005
Delaware inc. 1987, originally New York 1959

Power transisitors: 17% (0.1amps to 150amps, 30V to 1000V)
Hybrids: 60% (passive and active components)
Field effect transistors: 5%
Power MOSFETs: 18%
numbers seem to be fairly consistent.
only analog devices (hey, what would I know about analog devices?)
Company has been certified since 1990 and qualified since 1995 under MIL-PRF-38534 Class H, which is the standard military level, although there are lower levels. Class K is actually higher and applies to at least some space applications.

ISO 9001 in March 2000, recertified this past year after two additional surveillance audits. Now qualified for ISO 9001-2000 which may result in additional business.

90% custom products. This is actually a good thing as it avoids commoditization.
Some new demand from Motorola, non military.
All the usual military standards.

In the US: 6 sales people, 2 stocking distributor organizations in 39 locations with 270 sales people.

International: 2 representative organizations in 2 countries with 4 sales people, mixed with distribution. "Several" sales, marketing, and apps engineers for key accounts.

Raytheon accounted for 46% of net sales! Was 41% previous year. 61 new customers this past year out of 172 total customers. US Gov was only 8% vs 11% previous year. No other 10+% customers. But 15 customers were 87% of sales.

Due to changes in Congressional appropriations and military spending, Company had a 19% decrease in net bookings this past year. This doesn't look good, but in the later 10-Q for the first quarter of 2006, the book to bill ratio went up to 1.08 from 0.91 and sales continued to increase.

33 patents, all expired. No material impact. "The Company believes that engineering standards, manufacturing techniques and product reliability ar emore important to the successful manufacture and sale of products than the old patents that it had." which is probably true.

The Company is not in direct competition with any other semiconductor manufacturer for an identical mixture of products; however, one or more of the major manufacturers of semiconductors manufactures some of the Company's products. A few such major competitors (e.g., IXYS, Motorola, Intersil, Fairchild, among others) have elected to withdraw from the military market altogether. However, there is no assurance that the Company's business will increase as a result of such withdrawals. Other competitors in the military market include International Rectifier (the Omnirel Division), Microsemi (the NES Division), MS Kennedy, Natel and Sensitron. The Company competes principally on the basis of product quality, turn-around time, customer service and price. The Company believes that competition for sales of products that will ultimately be sold to the United States government has intensified and will continue to intensify as United States defense spending on high reliability components continues to decrease and the Department of Defense pushes for implementation of its 1995 decision to purchase COTS standard products in lieu of products made in accordance with more stringent military specifications.

91 employees (up from 90): 65 in production, 4 in sales/marketing, 6 executive/admin, 16 technical support, 5 of 91 are part time. No unions.

Diminishing number of suppliers for raw materials. Costs going up. They rely on 3-inch wafers.

Key suppliers: Egide USA Inc., Platronics Seals, Kyocera America, Coining, Kilburn Isotronics, IXYS, Purecoat International, Stellar Industries, and others.

No R&D expenditures over the last 2 years. Special design costs are borne by customers directly or indirectly.

Usual hazmat materials of a semiconductor company.

This is particularly bad and could make this a non-investment:

However, the Company has significant obligations arising from settlements in connection with its bankruptcy that require the Company to make substantial cash payments that cannot be supported by the current level of operations.

EPA Superfund site issue:

The Company is currently engaged in negotiations with the United States Environmental Protection Agency ("USEPA") to resolve the Company's alleged liability to USEPA at the following sites: Solitron Microwave Superfund Site, Port Salerno, Florida; Florida Petroleum Reprocessors Superfund Site, Fort Lauderdale, Florida; City Industries Superfund Site, Orlando, Florida; Forty-Third Street Bay Drum Superfund Site, Tampa, Florida; Casmalia Resources Superfund Site, Santa Barbara, California; and Solitron Devices Superfund Site, Riviera Beach, Florida. At a meeting with USEPA on March 23, 2001, USEPA contended that the Company's alleged share of liability at four (4) of the sites totals approximately $7.65 million, which USEPA broke down on a site by site basis as follows: Solitron Microwave, Port Salerno - $3.8 million; Florida Petroleum Reprocessors - $150,000; Casmalia Resources - $2.7 million; and Solitron Devices, Riviera Beach - $1 million.

and this:

The Company contends that the claims of USEPA and the Casmalia Resources private party group referenced above were discharged in bankruptcy pursuant to the Bankruptcy Court's Order Confirming Solitron's Fourth Amended Plan of Reorganization, entered in August 1993. Nevertheless, the Company is negotiating with USEPA to settle its outstanding liability at all sites based on an ability to pay ("ATP") determination.

Following a settlement conference on October 24, 2003, the Company received a final ATP Multi-Site Settlement Agreement from USEPA on January 23, 2004. The substantial provisions of the Agreement obligate the Company to pay to USEPA the sum of $74,000 over two years, in equal quarterly payments, plus interest. In addition, the Company is obligated 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 years 3-7 following the effective date of the Agreement. The Company signed the Agreement and returned it to USEPA for execution on January 26, 2004. After receipt of the signed Agreement, USEPA notified the Company that additional edits to the Agreement may be necessary. The Company expects to complete negotiations with USEPA in calendar year 2005. Once the agreement becomes effective, it is anticipated that USEPA will recommend to the PRP group at the Casmalia Resources Superfund Site that the group release the Company from further liability at the site upon the Company's compliance with the Agreement.

There's another one in Tappan, New York on 2002, with an agreement entered in March 2005.

This is too much uncertainty overhanging and the company isn't so great to start with.

Conclusion: Not a good investment.

UPDATE: Stop following