Solitron Devices (
As of February 28, 2017, Solitron had net operating losses for United States federal income tax purposes totaling approximately $10 million.
Under Section 382, Solitron’s use of those net operating losses to offset future taxable income could be substantially limited if Solitron experiences an “ownership change”. Generally, an “ownership change” occurs under Section 382 if a stockholder or group of stockholders that is deemed to own more than five percent (5.0%) of a company’s common stock increases its ownership percentage by more than 50 percentage points over its lowest ownership percentage during a rolling three-year period.
Pursuant to the Section 382 NOL Plan, if any person or group acquires 4.99 percent or more of the outstanding shares of common stock (subject to certain exceptions), there would be a triggering event under the Section 382 NOL Plan resulting in significant dilution in the ownership interest of such person or group in Solitron stock. The dilution would result from all other common stockholders being entitled to purchase additional shares of common stock at a substantial discount.
The New Rights will not be exercisable until the earlier to occur of (i) the tenth business day following a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 4.99% or more of the Common Stock (an “Acquiring Person“) or (ii) ten business days (or such later date as may be determined by action of the Board prior to such time as any person or group of affiliated persons becomes an Acquiring Person) following the commencement or announcement of an intention to make a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 4.99% or more of the Common Stock (the earlier of (i) and (ii) being referred to as the “Distribution Date“).