0001193125-20-006806.txt : 20200114 0001193125-20-006806.hdr.sgml : 20200114 20200114090658 ACCESSION NUMBER: 0001193125-20-006806 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 55 CONFORMED PERIOD OF REPORT: 20191130 FILED AS OF DATE: 20200114 DATE AS OF CHANGE: 20200114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIDEO DISPLAY CORP CENTRAL INDEX KEY: 0000758743 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPONENTS & ACCESSORIES [3670] IRS NUMBER: 581217564 STATE OF INCORPORATION: GA FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-13394 FILM NUMBER: 20525076 BUSINESS ADDRESS: STREET 1: 1868 TUCKER INDUSTRIAL DR CITY: TUCKER STATE: GA ZIP: 30084 BUSINESS PHONE: 7709382080 MAIL ADDRESS: STREET 1: 1868 TUCKER INDUSTRIAL DR CITY: TUCKER STATE: GA ZIP: 30084 10-Q 1 d860132d10q.htm 10-Q 10-Q
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended November 30, 2019.

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 Number 0-13394

 

 

VIDEO DISPLAY CORPORATION

(Exact name of registrant as specified on its charter)

 

 

 

GEORGIA    58-1217564

(State or other jurisdiction of

incorporation or organization)

  

(I.R.S. Employer

Identification No.)

1868 TUCKER INDUSTRIAL ROAD, TUCKER, GEORGIA 30084

(Address of principal executive offices)

770-938-2080

(Registrant’s telephone number including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange

on which registered

Common Stock, no par value   VIDE   OTCMKTS

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  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  ☒    No  ☐

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

 

Large accelerated filer      Accelerated filer  
Non-accelerated filer      Smaller reporting company  
     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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

As of November 30, 2019, the registrant had 5,878,290 shares of Common Stock outstanding.

 

 

 


Table of Contents

Video Display Corporation and Subsidiaries

Index

PART I. FINANCIAL INFORMATION

 

              

Page

   Item 1. Financial Statements.   
      Interim Condensed Consolidated Balance Sheets – November 30, 2019 (unaudited) and February 28, 2019    3
      Interim Condensed Consolidated Statements of Operations - Three and nine months ended November 30, 2019 and 2018 (unaudited)    5
      Interim Condensed Consolidated Statements of Shareholders’ Equity - Three and nine months ended November 30, 2019 and 2018 (unaudited)    6
      Interim Condensed Consolidated Statements of Cash Flows – Nine months ended November 30, 2019 and 2018 (unaudited)    7
      Notes to Interim Condensed Consolidated Financial Statements - (unaudited)    8
   Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations    16
   Item 3. Quantitative and Qualitative Disclosure About Market Risk    24
   Item 4. Controls and Procedures    24

PART II. OTHER INFORMATION

  
   Item 1. Legal Proceedings    25
   Item 1A. Risk Factors    25
   Item 2. Unregistered Sales of Equity Securities and Use of Proceeds    25
   Item 3. Defaults upon Senior Securities    25
   Item 4. Submission of Matters to a Vote of Security Holders    25
   Item 5. Other Information    25
   Item 6. Exhibits    25
   SIGNATURES    26

 

31.1

   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32

   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

2


Table of Contents

ITEM 1 – FINANCIAL STATEMENTS

Video Display Corporation and Subsidiaries

Interim Condensed Consolidated Balance Sheets (unaudited)

(in thousands)

 

     November 30,     February 28,  
     2019     2019  
     (unaudited)        
Assets     

Current assets

    

Cash and cash equivalents

   $ 73     $ 410  

Accounts receivable, less allowance for doubtful accounts of $3 and $16

     455       1,746  

Note receivable due from officers and directors, current (Note 7)

     224       209  

Inventories, net

     3,783       3,451  

Prepaid expenses and other current assets

     203       476  
  

 

 

   

 

 

 

Total current assets

     4,738       6,292  
  

 

 

   

 

 

 

Property, plant, and equipment

    

Land

     154       154  

Buildings

     2,853       2,760  

Construction in progress

     106       73  

Machinery and equipment

     5,740       5,732  
  

 

 

   

 

 

 
     8,853       8,719  

Accumulated depreciation and amortization

     (7,566     (7,398
  

 

 

   

 

 

 

Net property, plant, and equipment

     1,287       1,321  
  

 

 

   

 

 

 

Right of use assets under operating leases

     1,753       —    

Note receivable due from officers and directors, noncurrent (Note 7)

     19       189  

Other noncurrent assets

     2       5  
  

 

 

   

 

 

 

Total assets

   $ 7,799     $ 7,807  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these interim condensed consolidated statements.

 

3


Table of Contents

Video Display Corporation and Subsidiaries

Interim Condensed Consolidated Balance Sheets (unaudited) (continued)

(in thousands)

 

     November 30,     February 28,  
     2019     2019  
     (unaudited)        
Liabilities and Shareholders’ Equity     

Current liabilities

    

Accounts payable

   $ 1,663     $ 1,008  

Accrued liabilities

     348       382  

Current maturities of long-term debt

     —         23  

Customer deposits

     —         865  

Contract liabilities

     190       235  

Line of credit

     129       —    

Notes payable to officers and directors, current (Note 7)

     307       325  

Note payable for acquisition

     100       100  

Current operating lease liabilities

     557       —    
  

 

 

   

 

 

 

Total current liabilities

     3,294       2,938  

Long-term operating lease liabilities

     1,209       —    

Notes payable to officers and directors, less current maturities (Note 7)

     19       189  

Other noncurrent liabilities

     —         19  
  

 

 

   

 

 

 

Total liabilities

     4,522       3,146  
  

 

 

   

 

 

 
Shareholders’ Equity     

Preferred stock, no par value – 10,000 shares authorized; none issued and outstanding

     —         —    

Common stock, no par value – 50,000 shares authorized; 9,732 issued and 5,878 outstanding at November 30, 2019 and at February 28, 2019

     7,293       7,293  

Additional paid-in capital

     279       274  

Retained earnings

     11,987       13,376  

Treasury stock, shares at cost; 3,854 at November 30, 2019 and February 28, 2019

     (16,282     (16,282
  

 

 

   

 

 

 

Total shareholders’ equity

     3,277       4,661  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 7,799     $ 7,807  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these interim condensed consolidated statements.

 

4


Table of Contents

Video Display Corporation and Subsidiaries

Interim Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except per share data)

 

     Three Months Ended
November 30,
    Nine Months Ended
November 30,
 
     2019     2018     2019     2018  

Net sales

   $ 1,466     $ 4,170     $ 7,403     $ 11,512  

Cost of goods sold

     1,201       3,074       6,215       8,541  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     265       1,096       1,188       2,971  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

Selling and delivery

     136       188       447       627  

General and administrative

     872       885       2,635       2,577  
  

 

 

   

 

 

   

 

 

   

 

 

 
     1,008       1,073       3,082       3,204  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) income

     (743     23       (1,894     (233
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense)

        

Interest expense, net

     —         (4     (1     (18

Investment income (loss)

     11       (18     12       52  

Other, net

     104       70       494       319  
  

 

 

   

 

 

   

 

 

   

 

 

 
     115       48       505       353  
  

 

 

   

 

 

   

 

 

   

 

 

 

(Loss) income before income taxes

     (628     71       (1,389     120  

Income tax expense

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

   $ (628   $ 71     $ (1,389   $ 120  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss (income) per share-basic and diluted

   $ (.11   $ 0.01     $ (0.24   $ 0.02  
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic weighted average shares outstanding

     5,878       5,878       5,878       5,878  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted weighted average shares outstanding

     5,878       6,078       5,878       6,078  
  

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these interim condensed consolidated statements.

 

5


Table of Contents

Video Display Corporation and Subsidiaries

Interim Condensed Consolidated Statement of Shareholders’ Equity

(in thousands)

 

     Common
Shares
    Share
Amount
     Additional
Paid-in
Capital
     Retained
Earnings
    Treasury
Stock
    Total  

For the Three Months Ended November 30, 2019

 

           

Balance, August 31, 2019 (unaudited)

     5,878     $ 7,293      $ 277      $ 12,615     $ (16,282   $ 3,903  

Net loss

     —         —          —          (628     —         (628

Treasury stock purchase

     —         —          —          —         —         —    

Share based compensation

     —         —          2        —         —         2  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, November 30, 2019 (unaudited)

     5,878     $ 7,293      $ 279      $ 11,987     $ (16,282   $ 3,277  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

For the Nine Months Ended November 30, 2019

 

           

Balance, February 28, 2019 (audited)

     5,878     $ 7,293      $ 274      $ 13,376     $ (16,282   $ 4,661  

Net loss

     —         —          —          (1,389     —         (1,389

Treasury stock purchase

     —         —          —          —         —         —    

Share based compensation

     —         —          5        —         —         5  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, November 30, 2019 (unaudited)

     5,878     $ 7,293      $ 279      $ 11,987     $ (16,282   $ 3,277  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

For the Three Months Ended November 30, 2018

 

           

Balance, August 31, 2018 (unaudited)

     5,878     $ 7,293      $ 265      $ 13,358     $ (16,282   $ 4,634  

Net income

     —         —          —          71       —         71  

Treasury stock purchase

     —         —          —          —         —         —    

Share based compensation

     —         —          4        —         —         4  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, November 30, 2018 (unaudited)

     5,878     $ 7,293      $ 269      $ 13,429     $ (16,282   $ 4,709  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

For the Nine Months Ended November 30, 2018

 

           

Balance, February 28, 2018 (audited)

     5,887     $ 7,293      $ 256      $ 13,309     $ (16,272   $ 4,586  

Net income

     —         —          —          120       —         120  

Treasury stock purchase

     (9     —          —          —         (10     (10

Share based compensation

     —         —          13        —         —         13  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Balance, November 30, 2018 (unaudited)

     5,878     $ 7,293      $ 269      $ 13,429     $ (16,282   $ 4,709  
  

 

 

   

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these interim condensed consolidated statements.

 

6


Table of Contents

Video Display Corporation and Subsidiaries

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

 

     Nine Months Ended
November 30,
 
     2019     2018  
Operating Activities     

Net (loss) income

   $     (1,389   $     120  

Adjustments to reconcile net (loss) income to net cash used in operating activities:

    

Depreciation and amortization

     168       199  

Provision for doubtful accounts

     (13     (5

Provision for inventory reserve

     40       248  

Non-cash charge for share based compensation

     5       13  

Deferred rental income

     —         (60

Realized/unrealized gain on investments

     (12     (52

Other

     (3     8  

Changes in working capital items:

    

Accounts receivable

     1,304       (1,316

Inventories

     (372     543  

Prepaid expenses and other assets

     273       (51

Customer deposits

     (865     (95

Accounts payable and accrued liabilities

     621       83  

Contract liabilities

     (45     (371
  

 

 

   

 

 

 

Net cash used in operating activities

     (288     (736
  

 

 

   

 

 

 

Investing Activities

    

Capital expenditures

     (134     (30

Purchases of investments

     —         (981

Proceeds from the sales of investments

     12       1,317  

Proceeds from the sales of investment in real estate partnership- related party (Note 7)

     —         166  
  

 

 

   

 

 

 

Net cash (used in) provided by investing activities

     (122     472  
  

 

 

   

 

 

 
Financing Activities     

Proceeds from related party loans

     67       387  

Repayments of loans from related parties

     (100     (170

Repayments of long-term debt

     (23     (41

Proceeds from line of credit

     758       647  

Purchase of treasury stock

     —         (10

Repayments on line of credit

     (629     (490

Payments on marginal float

     —         (106
  

 

 

   

 

 

 

Net cash provided by financing activities

     73       217  
  

 

 

   

 

 

 

Net change in cash and cash equivalents

     (337     (47

Cash and cash equivalents, beginning of year

     410       81  
  

 

 

   

 

 

 

Cash and cash equivalents, end of period

   $ 73     $ 34  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these interim condensed consolidated statements.

 

7


Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2019

Note 1. – Summary of Significant Accounting Policies

The accompanying interim condensed consolidated financial statements include the accounts of Video Display Corporation, Inc. and its subsidiaries (“Video Display,” the “Company,” “we,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of February 28, 2019 has been derived from audited financial statements. The accompanying unaudited condensed consolidated financial statements as of, and for the three and nine months ended, November 30, 2019 and 2018 have been prepared in accordance with (i) accounting principles generally accepted in the U.S. for interim financial information and (ii) the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November 30, 2019 are not necessarily indicative of the results that may be expected for the year ending February 29, 2020. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Video Display’s Annual Report on Form 10-K for the year ended February 28, 2019 filed with the SEC on May 29, 2019.

Note 2. – Banking & Liquidity

The accompanying interim condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported a net loss for the period ending November 30, 2019 and a decrease in liquid assets for the comparable nine month fiscal 2020 period. Working capital decreased due to the adoption of Topic 842 (see discussion in Note 3) whereby lease liabilities were recognized for lease obligations. While the liabilities are reflected in both current and non-current liabilities, the corresponding lease right-of-use assets are solely reflected in non-current assets. The current lease liability recognized as of November 30, 2019 was approximately $557 thousand. The Company has sustained losses for the last three of four fiscal years and has seen overall a decline in working capital and liquid assets during this four year period. Annual losses over this time are due to a combination of decreasing revenues across certain divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2019 and February 28, 2019:

 

     November 30,
2019
     February 28,
2019
 

Working capital

   $ 1,444      $ 3,354  

Liquid assets

   $ 73      $ 410  

Management has implemented a plan to improve the liquidity of the Company. The Company has been fulfilling a plan to increase revenues at all the divisions, the Company has expanded its cyber security business by adding a second testing chamber for testing tempest products allowing it to increase the business in cyber testing services to supplement the product side of the business. The Company received its first order for these services in its second quarter of fiscal 2020 and expects this business to grow as the year progresses. The Company is also now involved in ruggedized displays. Each division is exploring opportunities structured to their particular division which has resulted in an increase in the growth in revenues for the last fiscal year and is expected to increase revenues this year. The Company has reduced other expenses at the divisions, as well as at the corporate location with the expectation that further decreases can be achieved. The Company has completed the merger of the two Florida businesses into one facility and the relocation of Lexel Imaging into a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. If additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.

 

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Video Display Corporation and Subsidiaries

November 30, 2019

 

The ability of the Company to continue as a going concern is dependent upon the success of management’s plans to improve revenues, the operational effectiveness of continuing operations, the procurement of suitable financing, or a combination of these. The uncertainty regarding the potential success of management’s plan create substantial doubt about the ability of the Company to continue as a going concern.

Note 3. – Recent Accounting Pronouncements

Effective March 1, 2019, we adopted Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), as amended by ASU 2018-01, Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842, ASU 2018-10, Codification Improvements to Topic 842, ASU 2018-11, Leases (Topic 842) – Targeted Improvements, ASU 2018-20, Leases (Topic 842) – Narrow-Scope Improvements for Lessors, and ASU 2019-01, Leases (Topic 842) – Codification Improvements, (collectively, the new leases standard or Topic 842). The new standard established a right-of-use (“ROU”) model that required lessees to record ROU assets and lease obligations on the balance sheet for all leases with terms longer than 12 months.

We adopted Topic 842 in first quarter fiscal 2020 using the modified retrospective method and utilized the optional transition method under which we continue to apply the legacy guidance in ASC 840, Leases, including its disclosure requirements, in the comparative period presented. Therefore, the adjustment to recognize the Company’s leases on the balance sheet related to the adoption of the new standard was recorded as of the adoption date and prior periods were not restated.

As part of the adoption of Topic 842, we elected to adopt certain of the optional practical expedients, including the package of practical expedients, which, among other things, gives us the option to not reassess: 1) whether expired or existing contracts are or contain leases; 2) the lease classification for expired or existing leases; and 3) initial direct costs for existing leases. We also elected the practical expedient to not separate lease and non-lease components, which allows us to account for lease and non-lease components as a single lease component. We did not elect the hindsight practical expedient in our determination of the lease term for existing leases; therefore, the original lease terms, as determined under ASC 840, were used in the calculation of the Company’s initial Topic 842 lease liabilities.

Adoption of the new standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $2.1 million as of March 1, 2019. The adoption of this standard did not have an impact on retained earnings, the consolidated statements of operations or the consolidated statements of cash flows.

 

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Video Display Corporation and Subsidiaries

November 30, 2019

 

Note 4. – Inventories

Inventories are stated at the lower of cost (first in, first out) or market and consisted of the following (in thousands):

 

     November 30,      February 28,  
     2019      2019  

Raw materials

   $ 3,104      $ 2,973  

Work-in-process

     692        706  

Finished goods

     886        631  
  

 

 

    

 

 

 
     4,682        4,310  

Reserves for obsolescence

     (899      (859
  

 

 

    

 

 

 
   $ 3,783      $ 3,451  
  

 

 

    

 

 

 

Note 5. – Line of Credit and Long-Term Debt

The Company had a $0.2 million line of credit with the Brand Banking Company with $0.1 million balance outstanding on the line at November 30, 2019. The line matured on December 25, 2019, is personally guaranteed by the Chief Executive Officer and has an interest rate of LIBOR plus 3.75%. The Company is in negotiations to have the line extended while more permanent financing is secured. The loan has no financial covenants.

Long-term debt consisted of the following (in thousands):

 

     November 30,      February 28,  
     2019      2019  

Mortgage payable to bank; interest rate at BB&T Bank base rate plus 0.5% (6% as of February 28, 2019); monthly principal and interest payments through July 2019; collateralized by land and building of Teltron Technologies, Inc. Loan paid in full as of November 30, 2019.

   $ —        $ 23  
  

 

 

    

 

 

 
     —          23  

Less current maturities

     —          (23
  

 

 

    

 

 

 
   $ —        $ —    
  

 

 

    

 

 

 

Note 6. – Leases

The Company leases its office space and manufacturing facilities under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.

 

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Video Display Corporation and Subsidiaries

November 30, 2019

 

Balance sheet information related to operating leases is as follows (in thousands):

 

     November 30,
2019
 

Assets

  

Operating lease right-of-use assets

   $ 1,753  
  

 

 

 

Liabilities

  

Current portion of operating lease liabilities

   $ 557  

Noncurrent portion of operating lease liabilities

     1,209  
  

 

 

 

Total operating lease liabilities

   $ 1,766  
  

 

 

 

Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $147 thousand for the three months ended November 30, 2019 and $440 thousand for the nine months ended November 30, 2019. The Company did not have any variable lease costs or short term lease costs for the three and nine months ended November 30, 2019. Operating lease cost were $146 thousand for the three months ended November 30, 2018 and $475 thousand for the nine months ended November 30, 2018.

Cash paid for amounts included in the measurement of operating lease liabilities was approximately $143 thousand during the three months ended November 30, 2019 and $429 thousand for the nine months ended November 30, 2019. The Company did not modify any existing leases or execute any new leases during the nine months ended November 30, 2019.

Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:

 

     November 30,
2019
 

Weighted average remaining lease term

     3.6 years  

Weighted average discount rate

     6

The following table summarizes the maturity of the Company’s operating lease liabilities as of November 30, 2019 (in thousands):

 

FY2020

   $ 143  

FY2021

     573  

FY2022

     618  

FY2023

     263  

FY2024

     190  

Thereafter

     185  
  

 

 

 

Total operating lease payments

     1,972  

Less imputed interest

     (206
  

 

 

 

Total operating lease liabilities

   $ 1,766  
  

 

 

 

Included above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by our chief executive officer) under operating leases expiring at various dates through 2025. Lease costs under these leases totaled approximately $97 thousand for the three months ended November 30, 2019 and $292 thousand for the nine months ended November 30, 2019 (which is included in the total lease costs noted above).

The Company subleases certain of its warehousing space and also leases a building that it owns in Pennsylvania. Sublease income and lease income are included in Other income, net in the Company’s condensed consolidated statements of operations and totaled approximately $90,000 for the three months ended November 30, 2019 and $270,000 for the nine months ended November 30, 2019. Future lease payments expected to be received as of November 30, 2019 are as follows (in thousands):

 

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FY2020

   $ 90  

FY2021

     364  

FY2022

     370  

FY2023

     238  

FY2024

     113  
  

 

 

 

Total

   $ 1,175  
  

 

 

 

Note 7. – Related Party Transactions

On March 30, 2016, the Company entered into an assignment with recourse of the note receivable from Z-Axis Inc. (Z-Axis) with Ronald D. Ordway, CEO, and Jonathan R. Ordway, related parties, for the sum of $912 thousand. The note receivable is collateralized by a security interest in the shares of Z-Axis as well as a personal guaranty of its majority shareholder. Z-Axis is current on all scheduled payments regarding this note. The Company retains the right to repurchase the note at any time for 80% of the outstanding principle balance. Also, in the event of default by Z-Axis, the Company is obligated to repurchase the note for 80% of the remaining principle balance plus any accrued interest. Accordingly, the Company has recognized this transaction as a secured borrowing. The $ 0.9 million, 9% interest rate, note originated on March 30, 2016, with payments beginning on April 16, 2016 and continuing for 56 months thereafter. The balance of the note was $243 thousand with $224 thousand classified as current as of November 30, 2019 and $398 thousand with $209 thousand classified as current as of February 28, 2019, respectively.

For the nine months ending November 30, 2019, the Company owed $83 thousand to Ronald D. Ordway, the CEO of the Company for funds borrowed during the current fiscal year. This is a non-interest bearing loan as repayment is expected in the short-term. See Note 6 for a discussion of leases with related parties.

On July 3, 2017, the Company and Ordway Properties, LLC purchased Honeyhill Properties, LLC which is the owner of the building at 510 Henry Clay Blvd. in Lexington, KY for $1,500,000. Video Display Corporation invested $500,000 towards the purchase price and accounted for the investment under the cost method since Ordway Properties, LLC was the majority owner. During the period ending November 30, 2017 the Company reduced its share in the LLC by $125,000, selling to Ordway Properties, LLC. In addition, during the period ending November 30, 2018, the Company’s sold its remaining $375,000 ownership interest to Ordway Properties, LLC receiving $166,457 in cash and $208,543 in forgiveness of rent that was accrued and owed. There was no gain or loss on the sale.

 

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Note 8. – Supplemental Cash Flow Information

Supplemental cash flow information is as follows (in thousands):

 

     Nine Months  
     Ended November 30,  
     2019      2018  

Cash paid for:

     

Interest

   $ 1      $ 18  
  

 

 

    

 

 

 

Non-cash activity:

     

Note receivable paid directly to officer

   $
 
 
155
 
 
     142  
  

 

 

    

 

 

 

Note payable to officer

   $ 155        142  
  

 

 

    

 

 

 

Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note 7)

   $ —          209  
  

 

 

    

 

 

 

Imputed interest expense

   $ 22        36  
  

 

 

    

 

 

 

Imputed interest income

   $ 22        36  
  

 

 

    

 

 

 

Note 9. – Shareholder’s Equity

Earnings (Loss) Per Share

Basic earnings (loss) per share is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Diluted earnings (loss) per share is calculated in a manner consistent with that of basic earnings (loss) per share while giving effect to all potentially dilutive common shares that were outstanding during the period.

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month and nine month periods ended November 30, 2019 and 2018 (in thousands, except per share data):

 

            Weighted         
            Average      Earnings (Loss)  
     Net      Common Shares      Per  
     Income (Loss)      Outstanding      Share  

Three months ended November 30, 2019

        

Basic

   $ (628      5,878      $ (0.11

Effect of dilution:

        

Options

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Diluted

   $ (628      5,878      $ (0.11
  

 

 

    

 

 

    

 

 

 

Three months ended November 30, 2018

        

Basic

   $ 71        5,878      $ 0.01  

Effect of dilution:

        

Options

     —          200        —    
  

 

 

    

 

 

    

 

 

 

Diluted

   $ 71        6,078      $  0.01  
  

 

 

    

 

 

    

 

 

 

 

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November 30, 2019

 

     Net
Income
(Loss)
     Weighted
Average
Common
Shares
Outstanding
     Earnings (Loss)
Per Share
 

Nine months ended November 30, 2019

        

Basic

   $ (1,389      5,878      $ (0.24

Effect of dilution:

        

Options

     —          —          —    
  

 

 

    

 

 

    

 

 

 

Diluted

   $ (1,389      5,878      $ (0.24
  

 

 

    

 

 

    

 

 

 

Nine months ended November 30, 2018

        

Basic

   $ 120        5,878      $ 0.02  

Effect of dilution:

        

Options

     —          200        —    
  

 

 

    

 

 

    

 

 

 

Diluted

   $ 120        6,078      $ 0.02  
  

 

 

    

 

 

    

 

 

 

Stock options convertible into 200,000 shares of the Company’s common stock were anti-dilutive and, therefore, were excluded from the three and nine months ended November 30, 2019.

Stock-Based Compensation Plans

For the nine-month period ended November 30, 2019 and 2018, the Company recognized general and administrative expenses of $5 thousand and $13 thousand, respectively, related to share-based compensation. As of November 30, 2019, and November 30, 2018, total unrecognized compensation costs related to stock options granted was $2 thousand and $12 thousand, respectively. The unrecognized stock option compensation cost is expected to be recognized by February, 2020.

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the Company to estimate the expected term of the stock option grants and expected future stock price volatility over the term. The term represents the expected period of time the Company believes the options will remain outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock, which represents the standard deviation of the differences in the weekly stock closing price, adjusted for dividends and stock splits.

No options were granted for the nine month period ending November 30, 2019 or for the nine month period ended November 30, 2018.

Stock Repurchase Program

The Company has a stock repurchase program, pursuant to which it had been authorized to repurchase up to 2,632,500 shares of the Company’s common stock in the open market. On January 20, 2014, the Board of Directors of the Company approved a one-time continuation of the stock repurchase program, and authorized the Company to repurchase up to 1,500,000 additional shares of the Company’s common stock in the open market. There is no minimum number of shares required to be repurchased under the program.

 

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For the nine months ending November 30, 2019, the Company did not purchase any shares of the Video Display Corporation stock. The Company repurchased 8,858 shares at an average cost of $1.12 per share for the nine months ending November 30, 2018. Under the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at November 30, 2019.

Note 10. – Income Taxes

Due to the Company’s overall and historical net loss position, no income tax expense was reported for the nine month period ending November 30, 2019 and November 30, 2018. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses.

Note 11. – Legal Proceedings

The Company is involved in various legal proceedings related to claims arising in the ordinary course of business. The Company is not currently a party to any legal proceedings the result of which management believes is likely to have a material adverse impact on its business, financial position, results of operation or cash flows.

 

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

The following discussion should be read in conjunction with the attached interim condensed consolidated financial statements and with the Company’s 2019 Annual Report to Shareholders, which included audited condensed consolidated financial statements and notes thereto as of and for the fiscal year ended February 28, 2019, as well as Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company manufactures and distributes a wide range of display devices, encompassing, among others, industrial, military, medical, and simulation display solutions. The Company is comprised of one segment—the manufacturing and distribution of displays and display components. The Company is organized into five interrelated operations aggregated into one reportable segment.

 

 

Simulation and Training Products – offers a wide range of projection display systems for use in training and simulation, military, medical, entertainment and industrial applications.

 

 

Cyber Secure Products – offers advanced TEMPEST technology, and (EMSEC) products. This business also provides various contract services including the design and testing solutions for defense and niche commercial uses worldwide.

 

 

Data Display CRTs– offers a wide range of CRTs for use in data display screens, including computer terminal monitors and medical monitoring equipment.

 

 

Broadcast and Control Center Products – offers high-end visual display products for use in video walls and command and control centers.

 

 

Other Computer Products – offers a variety of keyboard products.

During fiscal 2020, management of the Company is focusing key resources on strategic efforts to grow its business through internal sales of the Company’s more profitable product lines and reduce expenses in all areas of the business to bring its cost structure in line with the current size of the business. Challenges facing the Company during these efforts include:

Liquidity- The accompanying interim condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported a net loss for the period ending November 30, 2019 and a decrease in liquid assets for the comparable nine month fiscal 2020 period. Working capital decreased due to the adoption of Topic 842 (see discussion in Note 3) whereby lease liabilities were recognized for lease obligations. While the liabilities are reflected in both current and non-current liabilities, the corresponding lease right-of-use assets are solely reflected in non-current assets. The current lease liability recognized as of November 30, 2019 was approximately $557 thousand. The Company has sustained losses for the last three of four fiscal years and has seen overall a decline in working capital and liquid assets during this four year period. Annual losses over this time are due to a combination of decreasing revenues across certain divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2019 and February 28, 2019:

 

     November 30,
2019
     February 28,
2019
 

Working capital

   $  1,444      $  3,354  

Liquid assets

   $ 73      $ 410  

 

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Management has implemented a plan to improve the liquidity of the Company. The Company has been fulfilling a plan to increase revenues at all the divisions, the Company has expanded its cyber security business by adding a second testing chamber for testing tempest products allowing it to increase the business in cyber testing services to supplement the product side of the business. The Company received its first order for these services in its second quarter of fiscal 2020 and expects this business to grow as the year progresses. The Company is also now involved in ruggedized displays. Each division is exploring opportunities structured to their particular division which has resulted in an increase in the growth in revenues for the last fiscal year and is expected to increase revenues this year. The Company has reduced other expenses at the divisions, as well as at the corporate location with the expectation that further decreases can be achieved. The Company has completed the merger of the two Florida businesses into one facility and the relocation of Lexel Imaging into a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. If additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.

The ability of the Company to continue as a going concern is dependent upon the success of management’s plans to improve revenues, the operational effectiveness of continuing operations, the procurement of suitable financing, or a combination of these. The uncertainty regarding the potential success of management’s plan create substantial doubt about the ability of the Company to continue as a going concern.

Inventory management – The Company’s business units utilize different inventory components than the divisions had in the past. The Company has a monthly reserve at each of its divisions to offset any obsolescence although most purchases are for current orders, which should reduce the amount of obsolescence in the future. The Company still has CRT inventory in stock and component parts for legacy products, although it believes the inventory will be sold in the future, will continue to reserve for any additional obsolescence. Management believes its inventory reserves at November 30, 2019 and February 28, 2019 are adequate.

Results of Operations

The following table sets forth, for the three and nine months ended November 30, 2019 and 2018, the percentages that selected items in the Interim Condensed Consolidated Statements of Operations bear to total sales:

 

     Three Months     Nine Months  
     Ended November 30,     Ended November 30,  
     2019     2018     2019     2018  

Sales

        

Simulation and Training (VDC Display Systems)

     19.0     31.4     45.6     38.6  

Data Display CRT (Lexel and Data Display)

     34.1       13.8       22.9       13.1  

Broadcast and Control Centers (AYON Visual)

     —         0.3       —         1.6  

Cyber Secure Products (AYON Cyber Security)

     29.5       45.2       20.3       37.4  

Other Computer Products (Unicomp)

     17.4       9.3       11.2       9.3  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Company

     100.0     100.0     100.0     100.0  

Costs and expenses

        

Cost of goods sold

     82.0     73.7     84.0     74.2  

Selling and delivery

     9.2       4.5       6.0       5.4  

General and administrative

     59.5       21.2       35.6       22.4  
  

 

 

   

 

 

   

 

 

   

 

 

 
     150.7     99.4     125.6     102.0  

Operating (loss) income

     (50.7 )%      0.6     (25.6 )%      (2.0

Interest expense, net

     (0.0 )%      (0.1 )%      (0.0 )%      (0.2

Other income, net

     7.9       1.2       6.8       3.2  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss (income) before income taxes

     (42.8 )%      1.7     (18.8 )%      1.0  

Income tax expense

     —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income

     (42.8 )%      1.7     (18.8 )%      1.0  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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November 30, 2019

 

Net sales

Consolidated net sales decreased 35.7% for the nine months ended November 30, 2019 and 64.8% for the three months ended November 30, 2019 compared to the nine months and three months ended November 30, 2018. The Company’s AYON Cyber Security (ACS) division is down 65.0% for the nine months ending November 30, 2019 compared to the nine months last year. ACS had a record year with its top customer, which continues to do well, but not at the level of last year. ACS is down $1.3 million with that customer. ACS was completing a large order for the Department of State last year and is down $0.9 million with the State Department this year. ACS has been awarded a new contract with the State Department which will make up this shortfall and is expected to ship in the Company’s fourth quarter. For the three months ending November 30, 2019, ACS was down 77.1% because of our customers waiting for funding to be approved before they could place orders with us. The Display Systems division was down 24.0% for the nine months ended November 30, 2019 compared to the comparable period last year. The division’s business is down $1.1 million with its largest customer due to a rebidding situation which has slowed the orders from this customer until resolved. For the three months ended November 30, 2019, the Display System division was down 78.8% compared to the same three months last year. Last year the Company was completing a simulation project for the Air Force during the quarter. Business has been slow for this division, but they have received approximately $2.0 million in new orders. The Company is focused on the video wall business with a recent order for a video wall for a major company’s executive conference room. The Company is also focused on the ruggedized displays (displays specifically designed to operate reliably in harsh usage environments and conditions) and the simulation sectors of the business, having recently received a good order for simulation and pursuing opportunities in both the ruggedized displays and simulation business. The Data Display division showed an increase of 12.2% for the nine months ended November 30, 2019 due to increases in the sales of a specialty product know as a DVST (Direct view storage tube), with a majority of their sales in this product year to date. The Data Display division is also doing well with a long time customer, supplying them with CRTs (Cathode Ray Tubes) for their simulators. The Company’s keyboard division was down 22.7% for the nine months ended November 30, 2019 and 34.1% for three months ended November 30, 2019 respectively compared to the same periods last year. The Company acquired this company in October of 2017. This division is expected to continue at this level of sales each quarter.

Gross margins

Consolidated gross margins decreased both as a percentage to sales (16.1% to 25.8%) and actual dollars ($1,188 thousand to $2,971 thousand) for the nine months ended November 30, 2019 compared to the nine months ended November 30, 2018. Gross margins decreased for the three months ended November 30, 2019 compared to the three months ended November 30, 2018, both as a percentage to sales (18.1% to 26.3%) and actual dollars, ($265 thousand to $1,096 thousand).

AYON Cyber Security gross margin percentage was 29.1% compared to 48.1% and the gross margin dollars were $437 thousand compared to $2,068 thousand for the nine months ended November 30, 2019 and November 30, 2018 and 61.5% compared to 45.0% and $266 thousand compared to $848 thousand for the three months ended November 30, 2019 and November 30, 2018. The decrease in sales and the change in product mix causing an increase in material costs contributed to the decrease in gross margins for the nine months ended November 30, 2019. The margins improved as a percent to sales for the quarter ended November 30, 2019 due to a change in the mix with more service revenue.

 

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VDC Display Systems gross margin percentage was 15.0% compared 10.9% and the gross margin dollars were $507 thousand compared to $485 thousand for the nine months ended November 30, 2019 and November 30, 2018 and (33.9%) compared to 5.7% and ($94) thousand compared to $74 thousand for the three months ended November 30, 2019 and November 30, 2018. VDC Display Systems gross margins improved for the year due to lower labor costs as approximately 50% of the revenue was from two video wall installations. This was partially offset by higher material costs. Gross margins for the quarter were negative as there was not enough revenue to offset the fixed costs. The recent orders received should improve gross margins in the fourth quarter.

The keyboard division, Unicomp, had $286 thousand of gross margin dollars or 34.7% to sales for the nine months ending November 30, 2019 compared to $467 thousand or 43.7% for the nine months ending November 30, 2018. Their gross margin percentage improved to 38.8% for the three months ended November 30, 2019, but not up to last year’s three months ended November 30, 2018 at 40.1%. Actual gross margin dollars were $99 thousand compared to $155 thousand last year for the comparable quarter ended November 30, 2019. The Data Display division had a negative gross margin of $42 thousand or a negative 2.5% for nine months ending November 30, 2019. The Lexel Imaging facility, which manufactures the cathode ray tubes had gross margin dollars of $228 thousand and a gross margin percentage of 13.5% for the nine months ended November 30, 2019 compared to a negative $68 thousand for the nine months ended November 30, 2018. Lexel Imaging had a strong quarter in gross margins with $264 thousand or 52.7% for the three months ended November 30, 2019 compared to $107 thousand or 18.8% for the comparable three months ended November 30, 2018.

Operating expenses

Operating expenses decreased $122 thousand for the nine months ended November 30, 2019 compared to the nine months ended November 30, 2018. The decrease was due primarily to the reduction of corporate salaries and benefits by the layoff of two accounting personnel. This was facilitated by the move of the corporate accounting functions to the Company’s Cocoa, Florida location. Operating expenses decreased $65 for the three months ended November 30, 2019 compared to the three months ended November 30, 2018. The decrease is attributed to the reduction of corporate expenses and sales commissions.

Interest expense, net

Interest expense was $1 thousand for the nine months ending November 30, 2019. The interest expense was negligible for the three months ending November 30, 2019. There was $18 thousand for the nine months ending November 30, 2018 and $4 for the three months ending November 30, 2018. The interest expense is related to the line of credit at the Company’s bank and the interest on the margin balance in the Company’s investment account, which is a 3.75% rate. Last year’s interest included interest on a mortgage on a building the Company owns in Pennsylvania. The mortgage is paid, thus no related interest this year.

Other income, net

For the nine months ended November 30, 2019, the Company earned $191 thousand in royalty income, $270 thousand in rental income, $27 thousand in scrap sales, and $12 thousand investment income. For the three months ended November 30, 2019, the Company earned $90 thousand in rental income, $9 thousand in scrap income and $11 thousand in investment income. For the nine months ended November 30, 2018, the Company had $129 thousand in royalty income, $128 thousand in rental income, $33 thousand on the gain on the sale of equipment and $29 thousand in other, and $52 in investment gains including dividends. For the three months ended November 30, 2018 the Company had $40 thousand in rental income, $16 thousand in royalty income, $18 thousand in investment losses and $14 thousand in other.

 

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November 30, 2019

 

Income taxes

Due to the Company’s overall and historical net loss position, no income tax expense was reported for the nine month period ending November 30, 2019 and November 30, 2018. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses.

Liquidity and Capital Resources

The accompanying interim condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported a net loss for the period ending November 30, 2019 and a decrease in liquid assets for the comparable nine month fiscal 2020 period. Working capital decreased due to the adoption of Topic 842 (see discussion in Note 3) whereby lease liabilities were recognized for lease obligations. While the liabilities are reflected in both current and non-current liabilities, the corresponding lease right-of-use assets are solely reflected in non-current assets. The current lease liability recognized as of November 30, 2019 was approximately $557 thousand. The Company has sustained losses for the last three of four fiscal years and has seen overall a decline in working capital and liquid assets during this four year period. Annual losses over this time are due to a combination of decreasing revenues across certain divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2019 and February 28, 2019:

 

     November 30,
2019
     February 28,
2019
 

Working capital

   $  1,444      $  3,354  

Liquid assets

   $ 73      $ 410  

Management has implemented a plan to improve the liquidity of the Company. The Company has been fulfilling a plan to increase revenues at all the divisions, the Company has expanded its cyber security business by adding a second testing chamber for testing tempest products allowing it to increase the business in cyber testing services to supplement the product side of the business. The Company received its first order for these services in its second quarter of fiscal 2020 and expects this business to grow as the year progresses. The Company is also now involved in ruggedized displays. Each division is exploring opportunities structured to their particular division which has resulted in an increase in the growth in revenues for the last fiscal year and is expected to increase revenues this year. The Company has reduced other expenses at the divisions, as well as at the corporate location with the expectation that further decreases can be achieved. The Company has completed the merger of the two Florida businesses into one facility and the relocation of Lexel Imaging into a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. If additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.

The ability of the Company to continue as a going concern is dependent upon the success of management’s plans to improve revenues, the operational effectiveness of continuing operations, the procurement of suitable financing, or a combination of these. The uncertainty regarding the potential success of management’s plan create substantial doubt about the ability of the Company to continue as a going concern.

Cash used by operations for the nine months ended November 30, 2019 was $0.3 million. The net loss from operations was $1.4 million. Adjustments to reconcile net loss to net cash were $0.2, primarily depreciation. Changes in working capital provided $0.9 million, primarily due to a decrease in accounts receivable of $1.3 million, an increase in accounts payable and accrued liabilities of $0.6 million and a decrease in prepaid expenses and other assets of $0.3 million, offset by an increase in inventory of $0.4 million and a decrease in customer deposits of $0.9 million. Cash used by operations for the nine months ended November 30, 2018 was $0.7 million.

 

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November 30, 2019

 

Investing activities used $0.1 million for the nine months ended November 30, 2019 relating primarily to capital expenditures. Investing activities provided $0.5 million for the nine months ended November 30, 2018 primarily resulting from net cash proceeds received from the sale of investments and investment in real estate partnership.

Financing activities provided $0.1 million for the nine months ended November 30, 2019. This was primarily from the net borrowing from the line of credit at the Company’s bank of $0.1 million. Financing activities provided $0.2 million for the nine months ended November 30, 2018. Loans, net of repayment, from the Company’s CEO provided $0.2 million and net borrowings from the line of credit provided $0.2 million. These were offset by repayment of margin borrowings of $0.1 million and repayment of other debt.

The Company has a stock repurchase program, pursuant to which it has been authorized to repurchase up to 2,632,500 shares of the Company’s common stock in the open market. On January 20, 2014, the Board of Directors of the Company approved a one-time continuation of the stock repurchase program, and authorized the Company to repurchase up to 1,500,000 additional shares of the Company’s common stock on the open market, depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program.

For the nine months ending November 30, 2019, the Company did not purchase any shares of the Video Display Corporation stock. The Company repurchased 8,858 shares at an average cost of $1.12 per share for the nine months ending November 30, 2018. Under the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at November 30, 2019.

 

21


Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2019

 

Critical Accounting Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations are based upon the Company’s interim condensed consolidated financial statements. These interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the interim condensed consolidated financial statements and related notes. The accounting policies that may involve a higher degree of judgments, estimates, and complexity include reserves on inventories, revenue recognition, and the sufficiency of the valuation reserve related to deferred tax assets. The Company uses the following methods and assumptions in determining its estimates:

Reserves on Inventories

Reserves on inventories result in a charge to operations when the estimated net realizable value declines below cost. Management regularly reviews the Company’s investment in inventories for declines in value and establishes reserves when it is apparent that the expected net realizable value of the inventory falls below its carrying amount. Management reviews inventory levels on a quarterly basis. Such reviews include observations of product development trends of the original equipment manufacturers, new products being marketed, and technological advances relative to the product capabilities of the Company’s existing inventories. Management believes its inventory reserves at November 30, 2019 and February 28, 2019 are adequate.

Revenue Recognition

We recognize revenue when we transfer control of the promised products or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. We derive our revenue primarily from sales of simulation and video wall systems, cyber secure products, data displays, and keyboards. We exclude sales and usage-based taxes from revenue.

Our simulation and video wall systems are custom-built (using commercial off-the-shelf products) to customer specifications under fixed price contracts. Judgment is required to determine whether each product and service is considered to be a distinct performance obligation that should be accounted for separately under the contract. Generally, these contracts contain one performance obligation (the installation of a fully functional system). We recognize revenue for these systems over time as control is transferred based on labor hours incurred on each project.

We recognize revenue related to our cyber secure products, data displays, and keyboards at a point in time when control is transferred to the customer (generally upon shipment of the product to the customer).

Timing of invoicing to customers may differ from timing of revenue recognition; however, our contracts do not include a significant financing component as substantially all of our invoices have terms of 30 days or less. We are applying the practical expedient to exclude from consideration any contracts with payment terms of one year or less and we never offer terms extending beyond one year.

Other Loss Contingencies

Other loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple factors that often depend on judgments about potential actions by third parties.

 

22


Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2019

 

Income Taxes

Deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of November 30, 2019 and February 28, 2019, the Company has established a valuation allowance of $6.1 million and $5.8 million, respectively, on the Company’s current and non-current deferred tax assets.

The Company accounts for uncertain tax positions under the provisions of ASC 740, which contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company’s tax positions and tax benefits, which may require periodic adjustments. At November 30, 2019, the Company did not record any liabilities for uncertain tax positions.

Forward-Looking Information and Risk Factors

This report contains forward-looking statements and information that is based on management’s beliefs, as well as assumptions made by, and information currently available to management. When used in this document, the words “anticipate,” “believe,” “estimate,” “intends,” “will,” and “expect” and similar expressions are intended to identify forward-looking statements. Such statements involve a number of risks and uncertainties. These risks and uncertainties, which are included under Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended February 28, 2019 could cause actual results to differ materially.

 

23


Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2019

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company’s primary market risks include changes in technology. The Company operates in an industry which is continuously changing. Failure to adapt to the changes could have a detrimental effect on the Company.

ITEM 4. CONTROLS AND PROCEDURES

Our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, such as this quarterly report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Our chief executive officer and chief financial officer have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of November 30, 2019. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our annual report on Form 10-K and quarterly reports on Form 10-Q. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of November 30, 2019.

Changes in Internal Controls

There have not been any changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

24


Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2019

 

PART II

 

Item 1.    Legal Proceedings
   None.
Item 1A.    Risk Factors
   Information regarding risk factors appears under the caption Forward-Looking Statements and Risk Factors in Part I, Item 2 of this Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2019. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
   None.
Item 3.    Defaults upon Senior Securities
None.   
Item 4.    Submission of Matters to a Vote of Security Holders
   None.
Item 5.    Other information
   None.
Item 6.    Exhibits

 

Exhibit
Number

 

Exhibit Description

    3(a)   Articles of Incorporation of the Company (incorporated by reference to Exhibit 3A to the Company’s Registration Statement on Form S-18 filed January 15, 1985).(P)
    3(b)   By-Laws of the Company (incorporated by reference to Exhibit 3B to the Company’s Registration Statement on Form S-18 filed January 15, 1985).(P)
  10(a)   Lease dated April  1, 2015 by and between Registrant (Lessee) and Ronald D. Ordway (Lessor) with respect to premises located at 1868 Tucker Industrial Road, Tucker, Georgia. (incorporated by reference to Exhibit 10(c) to the Company’s 2015 Annual Report on Form 10-K.)
  10(b)   Lease dated February  19, 2015 by and between Registrant (Lessee) and Ordway Properties LLC (Lessor) with respect to premises located at 5155 King Street, Cocoa, FL. (incorporated by reference to Exhibit 10(g) to the Company’s 2015 Annual Report on Form 10-K.)
  10(c)   Video Display Corporation 2006 Stock Incentive Plan. (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement on Schedule 14A)
  31.1   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  31.2   Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
  32.1   Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema Document
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document

 

25


Table of Contents

SIGNATURES

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

 

      VIDEO DISPLAY CORPORATION
January 14, 2020     By:   /s/ Ronald D. Ordway
      Ronald D. Ordway
      Chief Executive Officer
January 14, 2020     By:   /s/ Gregory L. Osborn
      Gregory L. Osborn
      Chief Financial Officer

 

 

26

EX-31.1 2 d860132dex311.htm EX-31.1 EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald D. Ordway, certify that:

 

1.    I have reviewed this quarterly report on Form 10-Q of Video Display Corporation;
2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15f and 15d-15f) for the registrant and have:
   a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
   a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: January 14, 2020      

/s/ Ronald D. Ordway

      Ronald D. Ordway
      Chief Executive Officer
EX-31.2 3 d860132dex312.htm EX-31.2 EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory L. Osborn, certify that:

 

1.    I have reviewed this quarterly report on Form 10-Q of Video Display Corporation;
2.    Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15f and 15d-15f) for the registrant and have:
   a)    designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
   b)    designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
   c)    evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
   d)    disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):
   a)    all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
   b)    any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

 

Date: January 14, 2020      

/s/ Gregory L. Osborn

      Gregory L. Osborn
      Chief Financial Officer
EX-32 4 d860132dex32.htm EX-32 EX-32

Exhibit 32

CERTIFICATION

PURSUANT TO SECTION 906

OF

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C SECTION 1350)

The undersigned, as the Chief Executive Officer of Video Display Corporation, certifies that, to the best of his knowledge and belief, the Quarterly Report on Form 10-Q for the quarter ended November 30, 2019 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Video Display Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.

 

This 14th day of January, 2020      

/s/ Ronald D. Ordway

      Ronald D. Ordway
      Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Video Display Corporation and will be retained by Video Display Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION

PURSUANT TO SECTION 906

OF

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C SECTION 1350)

The undersigned, as the Chief Financial Officer of Video Display Corporation, certifies that, to the best of his knowledge and belief, the Quarterly Report on Form 10-Q for the quarter ended November 30, 2019 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Video Display Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.

 

This 14th day of January, 2020      

/s/ Gregory L. Osborn

      Gregory L. Osborn
      Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Video Display Corporation and will be retained by Video Display Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

The information in this Exhibit 32 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

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All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of February&#160;28, 2019 has been derived from audited financial statements. The accompanying unaudited condensed consolidated financial statements as of, and for the three and nine months ended, November&#160;30, 2019 and 2018 have been prepared in accordance with (i)&#160;accounting principles generally accepted in the U.S. for interim financial information and (ii)&#160;the instructions to Form <div style="white-space: nowrap; letter-spacing: 0px; top: 0px;;display:inline;">10-Q</div> and Rule <div style="white-space: nowrap; letter-spacing: 0px; top: 0px;;display:inline;">10-01</div> of Regulation <div style="white-space: nowrap; letter-spacing: 0px; top: 0px;;display:inline;">S-X</div> of the U.S. Securities and Exchange Commission (&#8220;SEC&#8221;). Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November&#160;30, 2019 are not necessarily indicative of the results that may be expected for the year ending February&#160;29, 2020. 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The new standard established a <div style="white-space: nowrap; letter-spacing: 0px; top: 0px;;display:inline;"><div style="white-space: nowrap; letter-spacing: 0px; top: 0px;;display:inline;">right-of-use</div></div> (&#8220;ROU&#8221;) model that required lessees to record ROU assets and lease obligations on the balance sheet for all leases with terms longer than 12 months.</div><div style="text-indent: 4%; font-family: times new roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;"><div style="letter-spacing: 0px; top: 0px;;display:inline;">We adopted Topic 842 in first quarter fiscal 2020 using the modified retrospective method and utilized the optional transition method under which we continue to apply the legacy guidance in ASC 840, <div style="font-style:italic;display:inline;;font-style:italic;display:inline;">Leases</div>, including its disclosure requirements, in the comparative period presented. 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The Company has completed the merger of the two Florida businesses into one facility and the relocation of Lexel Imaging into a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. 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See Note <div style="letter-spacing: 0px; top: 0px;;display:inline;">6</div>&#160;for a discussion of leases with related parties.</div><div style="text-indent: 4%; font-family: times new roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;"><div style="letter-spacing: 0px; top: 0px;;display:inline;">On July&#160;3, 2017, the Company and Ordway Properties, LLC purchased Honeyhill Properties, LLC which is the owner of the building at 510 Henry Clay Blvd. in Lexington, KY for $1,500,000. Video Display Corporation invested $500,000 towards the purchase price and accounted for the investment under the cost method since Ordway Properties, LLC was the majority owner. During the period ending November&#160;30, 2017 the Company reduced its share in the LLC by $125,000, selling to Ordway Properties, LLC. 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top: 0px;;display:inline;">&#160;</div></div></td><td style="padding-left: 0px;">&#160;</td><td style="padding-left: 0px; width: 4%;;vertical-align:bottom;">&#160;&#160;</td><td style="padding-left: 0px;;vertical-align:bottom;"><div style="margin-top: 0pt; margin-bottom: 0pt; border-top: 3px double rgb(0, 0, 0); line-height: normal;"><div style="letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="padding-left: 0px;;vertical-align:bottom;"><div style="margin-top: 0pt; margin-bottom: 0pt; border-top: 3px double rgb(0, 0, 0); line-height: normal;"><div style="letter-spacing: 0px; top: 0px;;display:inline;">&#160;</div></div></td><td style="padding-left: 0px;">&#160;</td></tr><tr style="font-family: times new roman; font-size: 10pt; page-break-inside: avoid;"><td style="background-color: rgb(204, 238, 255); width: 86%;;vertical-align:top;"><div style="text-indent: -1em; font-family: &quot;times new roman&quot;; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt; 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As of November&#160;30, 2019, and November&#160;30, 2018, total unrecognized compensation costs related to stock options granted was $2&#160;thousand and $12&#160;thousand, respectively. The unrecognized stock option compensation cost is expected to be recognized by February, 2020. </div></div><div style="text-indent: 4%; font-family: times new roman; font-size: 10pt; margin-top: 12pt; margin-bottom: 0pt;"><div style="letter-spacing: 0px; top: 0px;;display:inline;">The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the Company to estimate the expected term of the stock option grants and expected future stock price volatility over the term. The term represents the expected period of time the Company believes the options will remain outstanding based on historical information. 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5%;;vertical-align:bottom;">&#160;&#160;</td><td style="padding-left: 0px;;vertical-align:bottom;">&#160;</td><td style="padding-left: 0px;;text-align:right;;vertical-align:bottom;">&#8212;&#160;&#160;</td><td style="padding-left: 0px; white-space: nowrap;;vertical-align:bottom;">&#160;</td><td style="padding-left: 0px; width: 6%;;vertical-align:bottom;">&#160;&#160;</td><td style="padding-left: 0px;;vertical-align:bottom;">&#160;</td><td style="padding-left: 0px;;text-align:right;;vertical-align:bottom;">&#8212;&#160;&#160;</td><td style="padding-left: 0px; white-space: nowrap;;vertical-align:bottom;">&#160;</td></tr><tr style="font-size: 1px;"><td style="padding-left: 0px; width: 67%;;vertical-align:bottom;">&#160;</td><td style="padding-left: 0px; width: 6%;;vertical-align:bottom;">&#160;&#160;</td><td style="padding-left: 0px;;vertical-align:bottom;"><div style="margin-top: 0pt; margin-bottom: 0pt; border-top: 1px solid rgb(0, 0, 0); line-height: normal;"><div 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Shareholder's Equity
9 Months Ended
Nov. 30, 2019
Shareholder's Equity
Note 9. – Shareholder’s Equity
Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding during each period. Shares issued during the period are weighted for the portion of the period that they were outstanding. Diluted earnings (loss) per share is calculated in a manner consistent with that of basic earnings (loss) per share while giving effect to all potentially dilutive common shares that were outstanding during the period.
The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month and nine month periods ended November 30, 2019 and 2018 (in thousands, except per share data):
 
   
Net
Income (Loss)
   
Weighted
Average
Common Shares
Outstanding
   
Earnings (Loss)
Per

Share
 
Three months ended November 30, 2019
               
Basic
  $(628   5,878   $(0.11
Effect of dilution:
               
Options
   
 
 
    
 
 
    
 
 
 
   
 
 
   
 
 
   
 
 
 
Diluted
  $(628   5,878   $(0.11
   
 
 
   
 
 
   
 
 
 
Three months ended November 30, 2018
               
Basic
  $71    5,878   $0.01 
Effect of dilution:
               
Options
   —      200    —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $71    6,078   $0.01 
   
 
 
   
 
 
   
 
 
 
 
   
Net
Income 
(Loss)
   
Weighted
Average
Common 
Shares
Outstanding
   
Earnings (Loss)
Per
 
Share
 
Nine months ended November 30, 2019
               
Basic
  $(1,389   5,878   $(0.24
Effect of dilution:
               
Options
   —      —      —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $(1,389   5,878   $(0.24
   
 
 
   
 
 
   
 
 
 
Nine months ended November 30, 2018
               
Basic
  $120    5,878   $0.02 
Effect of dilution:
               
Options
   —      200    —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $120    6,078   $0.02 
   
 
 
   
 
 
   
 
 
 
Stock options convertible into 200,000 shares of the Company’s common stock were anti-dilutive and, therefore, were excluded from the three and nine months ended November 30, 2019.
Stock-Based Compensation Plans
For the nine-month period ended November 30, 2019 and 2018, the Company recognized general and administrative expenses of $5 thousand and $13 thousand, respectively, related to share-based compensation. As of November 30, 2019, and November 30, 2018, total unrecognized compensation costs related to stock options granted was $2 thousand and $12 thousand, respectively. The unrecognized stock option compensation cost is expected to be recognized by February, 2020.
The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the Company to estimate the expected term of the stock option grants and expected future stock price volatility over the term. The term represents the expected period of time the Company believes the options will remain outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock, which represents the standard deviation of the differences in the weekly stock closing price, adjusted for dividends and stock splits.
No options were granted for the nine month period ending November 30, 2019 or for the nine month period ended November 30, 2018.
Stock Repurchase Program
The Company has a stock repurchase program, pursuant to which it had been authorized to repurchase up to 2,632,500 shares of the Company’s common stock in the open market. On January 20, 2014, the Board of Directors of the Company approved a
one-time
continuation of the stock repurchase program, and authorized the Company to repurchase up to 1,500,000 additional shares of the Company’s common stock in the open market. There is no minimum number of shares required to be repurchased under the program.
For
the nine months ending
November 30, 2019, the Company did not purchase any shares of the Video Display Corporation stock. The Company repurchased 8,858 shares at an average cost of $1.12 per share for the nine months ending November 30, 2018. Under the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at November 30, 2019.
 

XML 13 R11.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Line of Credit and Long-Term Debt
9 Months Ended
Nov. 30, 2019
Line of Credit and Long-Term Debt
Note 5. – Line of Credit and Long-Term Debt
The Company had a $0.2 million line of credit with the Brand Banking Company with $0.1 million balance outstanding on the line at November 30, 2019. The line matured on December 25, 2019, is personally guaranteed by the Chief Executive Officer and has an interest rate of LIBOR plus 3.75%. The Company is in negotiations to have the line extended while more permanent financing is secured. The loan has no financial covenants.
Long-term debt consisted of the following (in thousands):
 
   
November 30,
   
February 28,
 
   
2019
   
2019
 
Mortgage payable to bank; interest rate at BB&T Bank base rate plus
0.5%
(
6%
as of February 28, 2019); monthly principal and interest payments through July 2019; collateralized by land and building of Teltron Technologies, Inc. Loan paid in full as of November 30, 2019.
  
$
—  
 
  $23 
   
 
 
   
 
 
 
   
 
—  
 
   23 
Less current maturities
  
 
—  
 
   (23
   
 
 
   
 
 
 
   
$
—  
 
  $—   
   
 
 
   
 
 
 
XML 14 R19.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Inventories (Tables)
9 Months Ended
Nov. 30, 2019
Inventories
Inventories are stated at the lower of cost (first in, first out) or market and consisted of the following (in thousands):  
         
   
November 30,
2019
   February 28,
2019
 
Raw materials
  
$
3,104
 
  $2,973 
Work-in-process
  
 
692
 
   706 
Finished goods
  
 
886
 
   631 
   
 
 
   
 
 
 
   
 
4,682
 
   4,310 
Reserves for obsolescence
  
 
(899
   (859
   
 
 
   
 
 
 
   
$
3,783
 
  $3,451 
   
 
 
   
 
 
 
XML 15 R32.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Schedule Of Weighted Average Information Associated With The Measurement Of Operating Lease (Detail)
Nov. 30, 2019
Weighted average remaining lease term 3 years 7 months 6 days
Weighted average discount rate 6.00%
XML 16 R36.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Related Party Transactions - Additional Information (Detail) - USD ($)
1 Months Ended 9 Months Ended
Jul. 03, 2017
Mar. 30, 2016
Nov. 30, 2017
Nov. 30, 2019
Nov. 30, 2018
Feb. 28, 2019
Z-Axis Inc            
Related Party Transaction [Line Items]            
Notes receivable assigned with recourse   $ 912,000   $ 243,000   $ 398,000
Notes repurchase right, percentage of outstanding principle balance   80.00%        
Secured borrowing   $ 900,000        
Effective interest rate   9.00%        
Payment period   56 months        
Date of first required payment   Apr. 16, 2016        
Notes payable to officers and directors       224,000   $ 209,000
Ronald D. Ordway            
Related Party Transaction [Line Items]            
Amount owes to officers and directors       83,000    
Honeyhill Properties LLC            
Related Party Transaction [Line Items]            
Purchase of related party $ 1,500,000          
Investment towards cost method investments $ 500,000          
Honeyhill Properties LLC | Ordway Properties, LLC            
Related Party Transaction [Line Items]            
Reduction in sale of shares to related party, amount     $ 125,000      
Ownership interest transfered         $ 375,000  
Proceeds from ownership interest in cash       166,457    
Forgiveness of rent accrued and owed       $ 208,543    
XML 18 R27.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Inventories (Detail) - USD ($)
$ in Thousands
Nov. 30, 2019
Feb. 28, 2019
Inventory [Line Items]    
Raw materials $ 3,104 $ 2,973
Work-in-process 692 706
Finished goods 886 631
Inventory, Gross 4,682 4,310
Reserves for obsolescence (899) (859)
Inventory, Net $ 3,783 $ 3,451
XML 19 R7.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies
9 Months Ended
Nov. 30, 2019
Summary of Significant Accounting Policies
Note 1. – Summary of Significant Accounting Policies
The accompanying interim condensed consolidated financial statements include the accounts of Video Display Corporation, Inc. and its subsidiaries (“Video Display,” the “Company,” “we,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of February 28, 2019 has been derived from audited financial statements. The accompanying unaudited condensed consolidated financial statements as of, and for the three and nine months ended, November 30, 2019 and 2018 have been prepared in accordance with (i) accounting principles generally accepted in the U.S. for interim financial information and (ii) the instructions to Form
10-Q
and Rule
10-01
of Regulation
S-X
of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended November 30, 2019 are not necessarily indicative of the results that may be expected for the year ending February 29, 2020. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Video Display’s Annual Report on Form
10-K
for the year ended February 28, 2019 filed with the SEC on May 29, 2019.
XML 20 R3.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Interim Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Nov. 30, 2019
Feb. 28, 2019
Accounts receivable, allowance for doubtful accounts $ 3 $ 16
Preferred stock, par value
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value
Common stock, shares authorized 50,000,000 50,000,000
Common stock, shares issued 9,732,000 9,732,000
Common stock, shares outstanding 5,878,000 5,878,000
Treasury stock, shares 3,854,000 3,854,000
XML 21 R23.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Shareholder's Equity (Tables)
9 Months Ended
Nov. 30, 2019
Reconciliation of Shares Used in Calculation of Basic and Dilutive Earnings (Loss) Per Share
The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month and nine month periods ended November 30, 2019 and 2018 (in thousands, except per share data):
 
   
Net
Income (Loss)
   
Weighted
Average
Common Shares
Outstanding
   
Earnings (Loss)
Per

Share
 
Three months ended November 30, 2019
               
Basic
  $(628   5,878   $(0.11
Effect of dilution:
               
Options
   
 
 
    
 
 
    
 
 
 
   
 
 
   
 
 
   
 
 
 
Diluted
  $(628   5,878   $(0.11
   
 
 
   
 
 
   
 
 
 
Three months ended November 30, 2018
               
Basic
  $71    5,878   $0.01 
Effect of dilution:
               
Options
   —      200    —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $71    6,078   $0.01 
   
 
 
   
 
 
   
 
 
 
 
   
Net
Income 
(Loss)
   
Weighted
Average
Common 
Shares
Outstanding
   
Earnings (Loss)
Per
 
Share
 
Nine months ended November 30, 2019
               
Basic
  $(1,389   5,878   $(0.24
Effect of dilution:
               
Options
   —      —      —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $(1,389   5,878   $(0.24
   
 
 
   
 
 
   
 
 
 
Nine months ended November 30, 2018
               
Basic
  $120    5,878   $0.02 
Effect of dilution:
               
Options
   —      200    —   
   
 
 
   
 
 
   
 
 
 
Diluted
  $120    6,078   $0.02 
   
 
 
   
 
 
   
 
 
 
XML 22 Show.js IDEA: XBRL DOCUMENT // Edgar(tm) Renderer was created by staff of the U.S. Securities and Exchange Commission. Data and content created by government employees within the scope of their employment are not subject to domestic copyright protection. 17 U.S.C. 105. var Show={};Show.LastAR=null,Show.showAR=function(a,r,w){if(Show.LastAR)Show.hideAR();var e=a;while(e&&e.nodeName!='TABLE')e=e.nextSibling;if(!e||e.nodeName!='TABLE'){var ref=((window)?w.document:document).getElementById(r);if(ref){e=ref.cloneNode(!0); e.removeAttribute('id');a.parentNode.appendChild(e)}} if(e)e.style.display='block';Show.LastAR=e};Show.hideAR=function(){Show.LastAR.style.display='none'};Show.toggleNext=function(a){var e=a;while(e.nodeName!='DIV')e=e.nextSibling;if(!e.style){}else if(!e.style.display){}else{var d,p_;if(e.style.display=='none'){d='block';p='-'}else{d='none';p='+'} e.style.display=d;if(a.textContent){a.textContent=p+a.textContent.substring(1)}else{a.innerText=p+a.innerText.substring(1)}}} XML 23 R26.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Recent Accounting Pronouncements - Additional Information (Detail) - USD ($)
$ in Thousands
Nov. 30, 2019
Mar. 01, 2019
Right of use assets $ 1,753  
Operating lease liability $ 1,766  
Accounting Standards Update 2016-02 [Member]    
Right of use assets   $ 2,100
Operating lease liability   $ 2,100
XML 24 R6.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Interim Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Nov. 30, 2019
Nov. 30, 2018
Operating Activities    
Net (loss) income $ (1,389) $ 120
Adjustments to reconcile net (loss) income to net cash used in operating activities:    
Depreciation and amortization 168 199
Provision for doubtful accounts (13) (5)
Provision for inventory reserve 40 248
Non-cash charge for share based compensation 5 13
Deferred rental income   (60)
Realized/unrealized gain on investments (12) (52)
Other (3) 8
Changes in working capital items:    
Accounts receivable 1,304 (1,316)
Inventories (372) 543
Prepaid expenses and other assets 273 (51)
Customer deposits (865) (95)
Accounts payable and accrued liabilities 621 83
Contract liabilities (45) (371)
Net cash used in operating activities (288) (736)
Investing Activities    
Capital expenditures (134) (30)
Purchases of investments   (981)
Proceeds from the sales of investments 12 1,317
Proceeds from the sales of investment in real estate partnership-related party (Note 8)   166
Net cash (used in) provided by investing activities (122) 472
Financing Activities    
Proceeds from related party loans 67 387
Repayments of loans from related parties (100) (170)
Repayments of long-term debt (23) (41)
Proceeds from line of credit 758 647
Purchase of treasury stock   (10)
Repayments on line of credit (629) (490)
Payments on marginal float   (106)
Net cash provided by financing activities 73 217
Net change in cash and cash equivalents (337) (47)
Cash and cash equivalents, beginning of year 410 81
Cash and cash equivalents, end of period $ 73 $ 34
XML 25 R2.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Interim Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Nov. 30, 2019
Feb. 28, 2019
Current assets    
Cash and cash equivalents $ 73 $ 410
Accounts receivable, less allowance for doubtful accounts of $3 and $16 455 1,746
Inventories, net 3,783 3,451
Prepaid expenses and other current assets 203 476
Total current assets 4,738 6,292
Property, plant, and equipment    
Land 154 154
Buildings 2,853 2,760
Construction in progress 106 73
Machinery and equipment 5,740 5,732
Total property, plant and equipment 8,853 8,719
Accumulated depreciation and amortization (7,566) (7,398)
Net property, plant, and equipment 1,287 1,321
Right of use assets under operating leases 1,753  
Note receivable due from officers and directors, noncurrent (Note 7) 19 189
Other noncurrent assets 2 5
Total assets 7,799 7,807
Current liabilities    
Accounts payable 1,663 1,008
Accrued liabilities 348 382
Current maturities of long-term debt 23
Customer deposits   865
Contract liabilities 190 235
Line of credit 129  
Note payable for acquisition 100 100
Current operating lease liabilities 557  
Total current liabilities 3,294 2,938
Long-term operating lease liabilities 1,209  
Notes payable to officers and directors, less current maturities (Note 7) 19 189
Other noncurrent liabilities   19
Total liabilities 4,522 3,146
Shareholders' Equity    
Preferred stock, no par value – 10,000 shares authorized; none issued and outstanding
Common stock, no par value – 50,000 shares authorized; 9,732 issued and 5,878 outstanding at November 30, 2019 and at February 28, 2019 7,293 7,293
Additional paid-in capital 279 274
Retained earnings 11,987 13,376
Treasury stock, shares at cost; 3,854 at November 30, 2019 and February 28, 2019 (16,282) (16,282)
Total shareholders' equity 3,277 4,661
Total liabilities and shareholders' equity 7,799 7,807
Officers and Directors    
Current assets    
Note receivable due from officers and directors (Note 8) 224 209
Current liabilities    
Notes payable to officers and directors, current (Note 7) $ 307 $ 325
XML 26 R22.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Supplemental Cash Flow Information (Tables)
9 Months Ended
Nov. 30, 2019
Supplemental Cash Flow Information
Supplemental cash flow information is as follows (in thousands):
 
   
Nine Months
Ended November 30,
 
   
2019
   2018 
Cash paid for:
          
Interest
  
$
1
 
  $18 
   
 
 
   
 
 
 
Non-cash
activity:
          
Note receivable paid directly to officer
  
$
155
 
   142 
   
 
 
   
 
 
 
Note payable to officer
  $
155
    142 
   
 
 
   
 
 
 
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note
7
)
  
$
 
   209 
   
 
 
   
 
 
 
Imputed interest expense
  
$
22
 
   36 
   
 
 
   
 
 
 
Imputed interest income
  
$
22
 
   36 
   
 
 
   
 
 
 
XML 27 R18.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Banking & Liquidity (Tables)
9 Months Ended
Nov. 30, 2019
Working Capital and Liquid Asset Position The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2019 and February 28, 2019:
   
November 30,

2019
   February 28,
2019
 
Working capital
  
$
1,444
 
  $3,354 
Liquid assets
  
$
73
 
  $410 
XML 28 R14.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Supplemental Cash Flow Information
9 Months Ended
Nov. 30, 2019
Supplemental Cash Flow Information
Note 8. – Supplemental Cash Flow Information
Supplemental cash flow information is as follows (in thousands):
 
   
Nine Months
Ended November 30,
 
   
2019
   2018 
Cash paid for:
          
Interest
  
$
1
 
  $18 
   
 
 
   
 
 
 
Non-cash
activity:
          
Note receivable paid directly to officer
  
$
155
 
   142 
   
 
 
   
 
 
 
Note payable to officer
  $
155
    142 
   
 
 
   
 
 
 
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note
7
)
  
$
 
   209 
   
 
 
   
 
 
 
Imputed interest expense
  
$
22
 
   36 
   
 
 
   
 
 
 
Imputed interest income
  
$
22
 
   36 
   
 
 
   
 
 
 
XML 29 R10.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Inventories
9 Months Ended
Nov. 30, 2019
Inventories
Note 4.
 Inventories
Inventories are stated at the lower of cost (first in, first out) or market and consisted of the following (in thousands):  
         
   
November 30,
2019
   February 28,
2019
 
Raw materials
  
$
3,104
 
  $2,973 
Work-in-process
  
 
692
 
   706 
Finished goods
  
 
886
 
   631 
   
 
 
   
 
 
 
   
 
4,682
 
   4,310 
Reserves for obsolescence
  
 
(899
   (859
   
 
 
   
 
 
 
   
$
3,783
 
  $3,451 
   
 
 
   
 
 
 
XML 30 R33.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Lessee Operating Lease Liability Maturity (Detail)
$ in Thousands
Nov. 30, 2019
USD ($)
FY2020 $ 143
FY2021 573
FY2022 618
FY2023 263
FY2024 190
Thereafter 185
Total operating lease payments 1,972
Less imputed interest (206)
Total operating lease liabilities $ 1,766
XML 31 R37.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Supplemental Cash Flow Information (Detail) - USD ($)
$ in Thousands
9 Months Ended
Nov. 30, 2019
Nov. 30, 2018
Cash paid for:    
Interest $ 1 $ 18
Non-cash activity:    
Note receivable paid directly to officer 155 142
Note payable to officer 155 142
Imputed interest expense 22 36
Imputed interest income $ 22 36
Ordway Properties, LLC    
Non-cash activity:    
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note 7)   $ 209
XML 32 R24.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Working Capital and Liquid Asset Position (Detail) - USD ($)
$ in Thousands
Nov. 30, 2019
Feb. 28, 2019
Liquidity And Capital Resources [Line Items]    
Working capital $ 1,444 $ 3,354
Liquid assets $ 73 $ 410
XML 33 R4.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Interim Condensed Consolidated Income Statements - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Nov. 30, 2019
Nov. 30, 2018
Nov. 30, 2019
Nov. 30, 2018
Net sales $ 1,466 $ 4,170 $ 7,403 $ 11,512
Cost of goods sold 1,201 3,074 6,215 8,541
Gross profit 265 1,096 1,188 2,971
Operating expenses        
Selling and delivery 136 188 447 627
General and administrative 872 885 2,635 2,577
Operating Expenses, Total 1,008 1,073 3,082 3,204
Operating (loss) income (743) 23 (1,894) (233)
Other income (expense)        
Interest expense, net   (4) (1) (18)
Investment income (loss) 11 (18) 12 52
Other, net 104 70 494 319
Total other income, net 115 48 505 353
(Loss) income before income taxes (628) 71 (1,389) 120
Income tax expense  
Net (loss) income $ (628) $ 71 $ (1,389) $ 120
Net loss (income) per share-basic and diluted $ (0.11) $ 0.01 $ (0.24) $ 0.02
Basic weighted average shares outstanding 5,878 5,878 5,878 5,878
Diluted weighted average shares outstanding 5,878 6,078 5,878 6,078
XML 34 R20.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Line of Credit and Long-Term Debt (Tables)
9 Months Ended
Nov. 30, 2019
Long- Term debt
Long-term debt consisted of the following (in thousands):
 
   
November 30,
   
February 28,
 
   
2019
   
2019
 
Mortgage payable to bank; interest rate at BB&T Bank base rate plus
0.5%
(
6%
as of February 28, 2019); monthly principal and interest payments through July 2019; collateralized by land and building of Teltron Technologies, Inc. Loan paid in full as of November 30, 2019.
  
$
—  
 
  $23 
   
 
 
   
 
 
 
   
 
—  
 
   23 
Less current maturities
  
 
—  
 
   (23
   
 
 
   
 
 
 
   
$
—  
 
  $—   
   
 
 
   
 
 
 
XML 35 R8.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Banking & Liquidity
9 Months Ended
Nov. 30, 2019
Banking & Liquidity
Note 2. – Banking & Liquidity
The accompanying interim condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported a net loss for the period ending November 30, 2019 and a decrease in liquid assets for the comparable nine month fiscal 2020 period. Working capital decreased due to the adoption of Topic 842 (see discussion in Note
3
) whereby lease liabilities were recognized for lease obligations. While the liabilities are reflected in both current and
non-current
liabilities, the corresponding lease
right-of-use
assets are solely reflected in
non-current
assets. The current lease liability recognized as of November 30, 2019 was approximately $557 thousand. The Company has sustained losses for the last three of four fiscal years and has seen overall a decline in working capital and liquid assets during this four year period. Annual losses over this time are due to a combination of decreasing revenues across certain divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2019 and February 28, 2019:
 
   
November 30,

2019
   February 28,
2019
 
Working capital
  
$
1,444
 
  $3,354 
Liquid assets
  
$
73
 
  $410 
Management has implemented a plan to improve the liquidity of the Company. The Company has been fulfilling a plan to increase revenues at all the divisions, the Company has expanded its cyber security business by adding a second testing chamber for testing tempest products allowing it to increase the business in cyber testing services to supplement the product side of the business. The Company received its first order for these services in its second quarter of fiscal 2020 and expects this business to grow as the year progresses. The Company is also now involved in ruggedized displays. Each division is exploring opportunities structured to their particular division which has resulted in an increase in the growth in revenues for the last fiscal year and is expected to increase revenues this year. The Company has reduced other expenses at the divisions, as well as at the corporate location with the expectation that further decreases can be achieved. The Company has completed the merger of the two Florida businesses into one facility and the relocation of Lexel Imaging into a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. If additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.
 
 
The ability of the Company to continue as a going concern is dependent upon the success of management’s plans to improve revenues, the operational effectiveness of continuing operations, the procurement of suitable financing, or a combination of these. The uncertainty regarding the potential success of management’s plan create substantial doubt about the ability of the Company to continue as a going concern.
XML 36 R28.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Line of Credit and Long-Term Debt (Detail) - USD ($)
$ in Thousands
Nov. 30, 2019
Feb. 28, 2019
Debt Instrument [Line Items]    
Notes and Mortgage Payable to bank $ 23
Less current maturities (23)
Long-term debt, less current maturities  
Mortgage payable to bank    
Debt Instrument [Line Items]    
Notes and Mortgage Payable to bank $ 23
XML 37 R39.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Shareholder's Equity - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Nov. 30, 2019
Nov. 30, 2019
Nov. 30, 2018
Jan. 20, 2014
Stock Based Compensation [Line Items]        
Total unrecognized compensation costs related to stock options and shares of restricted stock granted $ 2 $ 2 $ 12  
Stock options granted   0 0  
Authorized stock repurchase 2,632,500 2,632,500    
Additional authorized stock repurchase       1,500,000
Repurchase of treasury stock (in shares)     8,858  
Remaining repurchase of shares authorized 490,186 490,186    
Average cost of repurchase shares     $ 1.12  
Stock options convertible into shares excluded from diluted earnings per (loss) share calculation 200,000      
General and Administrative        
Stock Based Compensation [Line Items]        
Share-based compensation   $ 5 $ 13  
XML 38 R31.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Schedule of Balance Sheet Information Related to Operating Leases (Detail)
$ in Thousands
Nov. 30, 2019
USD ($)
Assets  
Operating lease right-of-use assets $ 1,753
Liabilities  
Current portion of operating lease liabilities 557
Noncurrent portion of operating lease liabilities 1,209
Total operating lease liabilities $ 1,766
XML 39 R35.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Leases - Additional Information (Detail) - USD ($)
3 Months Ended 9 Months Ended
Nov. 30, 2019
Nov. 30, 2018
Nov. 30, 2019
Nov. 30, 2018
Operating Lease, Cost $ 147,000 $ 146,000 $ 440,000 $ 475,000
Operating Lease, Payments 143,000   429,000  
Operating Leases, Income Statement, Lease Revenue 90,000   270,000  
Southeast Metro Savings LLC and Honeyhill Properties LLC [Member]        
Operating Lease, Cost $ 97,000   $ 292,000  
XML 40 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes
9 Months Ended
Nov. 30, 2019
Income Taxes
Note 10. – Income Taxes
Due to the Company’s overall and historical net loss position,
no
income tax expense was reported for the nine month period ending November 30, 2019 and November 30, 2018. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses.
XML 41 R12.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Leases
9 Months Ended
Nov. 30, 2019
Leases [Abstract]  
Lessee
Note 6. – Leases
The Company leases its office space and manufacturing facilities under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities. The Company does not have any finance leases.
Balance sheet information related to operating leases is as follows (in thousands):
 
   
November 30,
2019
 
Assets
     
Operating lease
right-of-use
assets
  $1,753 
   
 
 
 
Liabilities
  
 
 
 
Current portion of operating lease liabilities
  $557 
Noncurrent portion of operating lease liabilities
   1,209 
   
 
 
 
Total operating lease liabilities
  $1,766 
   
 
 
 
 
Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $147 thousand for the three months ended November 30, 2019 and $440 thousand for the nine months ended November 30, 2019. The Company did not have any variable lease costs or short term lease costs for the three and nine months ended November 30, 2019. Operating lease cost were $146 thousand for the three months ended November 30, 2018 and $475 thousand for the nine months ended November 30, 2018.
Cash paid for amounts included in the measurement of operating lease liabilities was approximately $143 thousand during the three months ended November 30, 2019 and $429 thousand for the nine months ended November 30, 2019. The Company did not modify any existing leases or execute any new leases during the nine months ended November 30, 2019.
Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:
 
   
November 30,
2019
 
Weighted average remaining lease term
   
3.6
years
 
Weighted average discount rate
   6
The following table summarizes the maturity of the Company’s operating lease liabilities as of November 30, 2019 (in thousands):
 
FY2020
  
$
143 
FY2021
   573 
FY2022
   618 
FY2023
   263 
FY2024
   190 
Thereafter
   185 
   
 
 
 
Total operating lease payments
   1,972 
Less imputed interest
   (206
   
 
 
 
Total operating lease liabilities
  $1,766 
   
 
 
 
Included above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by our chief executive officer) under operating leases expiring at various dates through 2025. Lease costs under these leases totaled approximately $97 thousand for the three months ended November 30, 2019 and $292 thousand for the nine months ended November 30, 2019 (which is included in the total lease costs noted above).
The Company subleases certain of its warehousing space and also leases a building that it owns in Pennsylvania. Sublease income and lease income are included in Other income, net in the Company’s condensed consolidated statements of operations and totaled approximately $
90,000
for the three months ended November 30, 2019 and $
270,000
for the nine months ended November 30, 2019.
Future lease payments expected to be received as of November 30, 2019 are as follows (in thousands):
 
FY2020
  $90 
FY2021
   364 
FY2022
   370 
FY2023
   238 
FY2024
   113 
   
 
 
 
Total
  $1,175 
   
 
 
 
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htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Line of Credit and Long-Term Debt - Additional Information (Detail)
$ in Thousands
9 Months Ended
Nov. 30, 2019
USD ($)
Debt Instrument [Line Items]  
Line of credit, current balance $ 129
Line of credit maturity date Dec. 25, 2019
Interest rate description interest rate of LIBOR plus 3.75%
Brand Banking Company  
Debt Instrument [Line Items]  
Line of credit $ 200
Line of credit, current balance $ 100
Line of Credit | London Interbank Offered Rate (LIBOR)  
Debt Instrument [Line Items]  
Line of credit facility, interest rate 3.75%

XML 44 R34.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Schedule Of Future Minimum Rental Payments For Operating Leases (Detail)
$ in Thousands
Nov. 30, 2019
USD ($)
FY2020 $ 90
FY2021 364
FY2022 370
FY2023 238
FY2024 113
Total $ 1,175
XML 45 R38.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Reconciliation of Basic Earnings (Loss) Per Share to Diluted Earnings (Loss) Per Share (Detail) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Nov. 30, 2019
Nov. 30, 2018
Nov. 30, 2019
Nov. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Net Income (Loss), Basic $ (628) $ 71 $ (1,389) $ 120
Net Income (Loss), Options 0 0 0 0
Net Income (Loss), Diluted $ (628) $ 71 $ (1,389) $ 120
Weighted Average Common Shares Outstanding, Basic 5,878 5,878 5,878 5,878
Weighted Average Common Shares Outstanding, Options   200   200
Weighted Average Common Shares Outstanding, Diluted 5,878 6,078 5,878 6,078
Earnings (Loss) Per Share, Basic $ (0.11) $ 0.01 $ (0.24) $ 0.02
Earnings (Loss) Per Share, Options 0 0 0 0
Earnings (Loss) Per Share, Diluted $ (0.11) $ 0.01 $ (0.24) $ 0.02
XML 46 R17.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Legal Proceedings
9 Months Ended
Nov. 30, 2019
Legal Proceedings
Note 11. – Legal Proceedings
The Company is involved in various legal proceedings related to claims arising in the ordinary course of business. The Company is not currently a party to any legal proceedings the result of which management believes is likely to have a material adverse impact on its business, financial position, results of operation or cash flows.
XML 47 R13.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Related Party Transactions
9 Months Ended
Nov. 30, 2019
Related Party Transactions [Abstract]  
Related Party Transactions
Note 7. – Related Party Transactions
On March 30, 2016, the Company entered into an assignment with recourse of the note receivable from
Z-Axis
Inc.
(Z-Axis)
with Ronald D. Ordway, CEO, and Jonathan R. Ordway, related parties, for the sum of $912 thousand. The note receivable is collateralized by a security interest in the shares of
Z-Axis
as well as a personal guaranty of its majority shareholder.
Z-Axis
is current on all scheduled payments regarding this note. The Company retains the right to repurchase the note at any time for 80% of the outstanding principle balance. Also, in the event of default by
Z-Axis,
the Company is obligated to repurchase the note for 80% of the remaining principle balance plus any accrued interest. Accordingly, the Company has recognized this transaction as a secured borrowing. The $ 0.9 million, 9% interest rate, note originated on March 30, 2016, with payments beginning on April 16, 2016 and continuing for 56 months thereafter. The balance of the note was $243 thousand with $224 thousand classified as current as of November 30, 2019 and $398 thousand with $209 thousand classified as current as of February 28, 2019, respectively.
For the nine months ending November 30, 2019, the Company owed $83 thousand to Ronald D. Ordway, the CEO of the Company for funds borrowed during the current fiscal year. This is a
non-interest
bearing loan as repayment is expected in the short-term. See Note
6
 for a discussion of leases with related parties.
On July 3, 2017, the Company and Ordway Properties, LLC purchased Honeyhill Properties, LLC which is the owner of the building at 510 Henry Clay Blvd. in Lexington, KY for $1,500,000. Video Display Corporation invested $500,000 towards the purchase price and accounted for the investment under the cost method since Ordway Properties, LLC was the majority owner. During the period ending November 30, 2017 the Company reduced its share in the LLC by $125,000, selling to Ordway Properties, LLC. In addition, during the period ending
November
 30
, 2018, the Company’s sold its remaining $375,000 ownership interest to Ordway Properties, LLC receiving $166,457 in cash and $208,543 in forgiveness of rent that was accrued and owed. There was no gain or loss on the sale.
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Recent Accounting Pronouncements
9 Months Ended
Nov. 30, 2019
Recent Accounting Pronouncements
Note 3. – Recent Accounting Pronouncements
Effective March 1, 2019, we adopted Accounting Standards Update (“ASU”)
No. 2016-02,
Leases (Topic 842),
as amended by ASU
2018-01,
Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842,
ASU
2018-10,
Codification Improvements to Topic 842
, ASU
2018-11,
Leases (Topic 842) – Targeted Improvements,
ASU
2018-20,
Leases (Topic 842) – Narrow-Scope Improvements for Lessors
, and
ASU
2019-01,
Leases (Topic 842) – Codification Improvements
, (collectively, the new leases standard or Topic 842). The new standard established a
right-of-use
(“ROU”) model that required lessees to record ROU assets and lease obligations on the balance sheet for all leases with terms longer than 12 months.
We adopted Topic 842 in first quarter fiscal 2020 using the modified retrospective method and utilized the optional transition method under which we continue to apply the legacy guidance in ASC 840,
Leases
, including its disclosure requirements, in the comparative period presented. Therefore, the adjustment to recognize the Company’s leases on the balance sheet related to the adoption of the new standard was recorded as of the adoption date and prior periods were not restated.
As part of the adoption of Topic 842, we elected to adopt certain of the optional practical expedients, including the package of practical expedients, which, among other things, gives us the option to not reassess: 1) whether expired or existing contracts are or contain leases; 2) the lease classification for expired or existing leases; and 3) initial direct costs for existing leases. We also elected the practical expedient to not separate lease and
non-lease
components, which allows us to account for lease and
non-lease
components as a single lease component. We did not elect the hindsight practical expedient in our determination of the lease term for existing leases; therefore, the original lease terms, as determined under ASC 840, were used in the calculation of the Company’s initial Topic 842 lease liabilities.
Adoption of the new standard resulted in the recognition of operating lease assets and operating lease liabilities of approximately $2.1 million as of March 1, 2019. The adoption of this standard did not have an impact on retained earnings, the consolidated statements of operations or the consolidated statements of cash flows.
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Line of Credit and Long-Term Debt (Parenthetical) (Detail) - Mortgage payable to bank
9 Months Ended
Nov. 30, 2019
Feb. 28, 2019
Debt Instrument [Line Items]    
Debt Instrument, interest rate terms Mortgage payable to bank; interest rate at BB&T Bank base rate plus 0.5% (6% as of February 28, 2019); monthly principal and interest payments through July 2019; collateralized by land and building of Teltron Technologies, Inc. Loan paid in full as of November 30, 2019  
Combined rate   6.00%
Base Rate    
Debt Instrument [Line Items]    
Interest rate 0.50%  
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Banking & Liquidity - Additional Information (Detail)
$ in Thousands
9 Months Ended
Nov. 30, 2019
USD ($)
Business
Line of Credit Facility [Line Items]  
Number of business merged | Business 2
Operating Lease, Liability, Current | $ $ 557
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Interim Condensed Consolidated Statement of Shareholders' Equity - USD ($)
$ in Thousands
Total
Common Shares
Additional Paid-in Capital
Retained Earnings
Treasury Stock
Balance (in shares) at Feb. 28, 2018   5,887,000      
Balance at Feb. 28, 2018 $ 4,586 $ 7,293 $ 256 $ 13,309 $ (16,272)
Net income (loss) $ 120     120  
Treasury stock purchase, Shares (8,858) (9,000)      
Treasury stock purchase $ (10)       (10)
Share based compensation 13   13    
Balance (in shares) at Nov. 30, 2018   5,878,000      
Balance at Nov. 30, 2018 4,709 $ 7,293 269 13,429 (16,282)
Balance (in shares) at Aug. 31, 2018   5,878,000      
Balance at Aug. 31, 2018 4,634 $ 7,293 265 13,358 (16,282)
Net income (loss) 71     71  
Treasury stock purchase, Shares   0      
Treasury stock purchase 0        
Share based compensation 4   4    
Balance (in shares) at Nov. 30, 2018   5,878,000      
Balance at Nov. 30, 2018 4,709 $ 7,293 269 13,429 (16,282)
Balance (in shares) at Feb. 28, 2019   5,878,000      
Balance at Feb. 28, 2019 4,661 $ 7,293 274 13,376 (16,282)
Net income (loss) (1,389)     (1,389)  
Treasury stock purchase, Shares   0      
Treasury stock purchase 0        
Share based compensation 5   5    
Balance (in shares) at Nov. 30, 2019   5,878,000      
Balance at Nov. 30, 2019 3,277 $ 7,293 279 11,987 (16,282)
Balance (in shares) at Aug. 31, 2019   5,878,000      
Balance at Aug. 31, 2019 3,903 $ 7,293 277 12,615 (16,282)
Net income (loss) (628)     (628)  
Treasury stock purchase, Shares   0      
Treasury stock purchase 0        
Share based compensation 2   2    
Balance (in shares) at Nov. 30, 2019   5,878,000      
Balance at Nov. 30, 2019 $ 3,277 $ 7,293 $ 279 $ 11,987 $ (16,282)
XML 53 R1.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Cover Page
9 Months Ended
Nov. 30, 2019
shares
Document Information [Line Items]  
Document Type 10-Q
Amendment Flag false
Document Period End Date Nov. 30, 2019
Document Fiscal Year Focus 2020
Document Fiscal Period Focus Q3
Entity Registrant Name VIDEO DISPLAY CORP
Trading Symbol VIDE
Entity Central Index Key 0000758743
Current Fiscal Year End Date --02-28
Entity Current Reporting Status Yes
Entity Shell Company false
Entity Filer Category Non-accelerated Filer
Entity Emerging Growth Company false
Entity Small Business true
Entity Common Stock, Shares Outstanding 5,878,290
Entity Interactive Data Current Yes
Title of 12(b) Security Common Stock
Security Exchange Name NONE
Entity Address, Country GE
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Leases (Tables)
9 Months Ended
Nov. 30, 2019
Leases [Abstract]  
Schedule of Balance Sheet Information Related to Operating Leases
Balance sheet information related to operating leases is as follows (in thousands):
 
   
November 30,
2019
 
Assets
     
Operating lease
right-of-use
assets
  $1,753 
   
 
 
 
Liabilities
  
 
 
 
Current portion of operating lease liabilities
  $557 
Noncurrent portion of operating lease liabilities
   1,209 
   
 
 
 
Total operating lease liabilities
  $1,766 
   
 
 
 
Schedule Of Weighted Average Information Associated With The Measurement Of Operating Lease
Weighted average information associated with the measurement of the Company’s remaining operating lease obligations is as follows:
 
   
November 30,
2019
 
Weighted average remaining lease term
   
3.6
years
 
Weighted average discount rate
   6
Lessee, Operating Lease, Liability, Maturity
The following table summarizes the maturity of the Company’s operating lease liabilities as of November 30, 2019 (in thousands):
 
FY2020
  
$
143 
FY2021
   573 
FY2022
   618 
FY2023
   263 
FY2024
   190 
Thereafter
   185 
   
 
 
 
Total operating lease payments
   1,972 
Less imputed interest
   (206
   
 
 
 
Total operating lease liabilities
  $1,766 
   
 
 
 
Schedule of Future Minimum Rental Payments for Operating Leases Future lease payments expected to be received as of November 30, 2019 are as follows (in thousands):
 
FY2020
  $90 
FY2021
   364 
FY2022
   370 
FY2023
   238 
FY2024
   113 
   
 
 
 
Total
  $1,175 
   
 
 
 
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3 Months Ended 9 Months Ended
Nov. 30, 2019
Nov. 30, 2019
Nov. 30, 2018
Income Taxes [Line Items]      
Income tax expense