Video Display Corporation and Subsidiaries
May 31, 2020
specialized displays in the quarter with an additional backlog of $1.2 million in these products. With the acquisition of the display company, the Company completed the transfer of the
remaining CRT operations to its Lexel Imaging facility in Lexington, KY in order to make room for the new business in its Cocoa facility. This will also reduce expenses in the CRT operation by having that business all under one roof. The Company
also moved the corporate accounting functions to the Cocoa, Florida location in fiscal 2020 which allows the Company to become more efficient and save money on reducing redundant operations. The plant move of its subsidiary in Lexington, Kentucky is
completed and inventory from Tucker, Georgia and Cocoa, Florida have been moved to the Kentucky operation. This subsidiary saw a turn -around in the recently completed fiscal year, being the only division to have a profitable year. The plant move at
the Florida operations was successful as the Company completed the merger of its two Florida businesses and absorbed the acquisition of the specialized display company. Management continues to explore options to monetize certain long-term assets of
the business, including the possible sale of a building in Pennsylvania. 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
managements 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 managements plan create
substantial doubt about the ability of the Company to continue as a going concern.
Cash used by operations for the three months ended
May 31, 2020 was $0.5 million. Adjustments to net loss were $0.1 million for non-cash depreciation and amortization charges. Changes in working capital used $0.6 million, primarily due to
cash provided by decreases in accounts receivable and inventories of $1.1 million in aggregate offset by an increase in contract assets ($655 thousand) and a decrease in customer deposits and accounts payable and accrued liabilities aggregating
a use of $1.0 million. Cash provided by operations for the three months ended May 31, 2019 was $0.3 million.
minimal investing activities for the three months ended May 31, 2020. The Company used $19 thousand on capital assets expenditures and $43 thousand on trading security purchases offset with $18 received from sale of investments.
Investing activities used cash of $0.1 million during the three months ended May 31, 2019 resulting primarily from the purchase of capital assets.
Financing activities provided $1.0 million for the three months ended May 31, 2020 resulting from $1.0 million proceeds
received from the PPP Loan discussed in Note 6 of the interim condensed consolidated financial statements marginally offset by repayment of $35 thousand in related party loans. Financing activities used $23 thousand for the quarter ended
May 31, 2019 related to the final debt payments made on the Teltron Building.
The Company has a stock repurchase program, pursuant
to which it has been authorized to repurchase up to 2,632,500 shares of the Companys 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 Companys 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 quarter ending May 31, 2020 and May 31, 2019, the Company did
not purchase any shares of the Video Display Corporation stock. Under the Companys stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at May 31, 2020.
Critical Accounting Estimates
Managements Discussion and Analysis of Financial Condition and Results of Operations are based upon the Companys 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: