Liquidity	9 Months Ended
Nov. 30, 2013
Liquidity	Note 2. – Liquidity On August 30, 2013, Video Display Corporation (the “Company”) completed the sale of the majority of the assets and the transfer of specified liabilities of the Company’s wholly-owned subsidiary, Aydin Displays Inc. (“Aydin”). Aydin’s assets were sold to a newly formed acquisition affiliate of Sparton Corp. for a combination of cash totaling $15 million, plus an additional earn-out potential that could be in excess of $6 million dollars based upon the achievement of reaching certain projected levels of EBITDA generated by the “new” Aydin in the subsequent 12-month period to the August 30, 2013 closing. The sale provisions included a holdback of $1.2 million on the proceeds, which was put in an escrow account until August 30, 2014. The Company shows this as restricted cash on its November 30, 2013 balance sheet. The Company used the proceeds to pay-off the line of credit, one of its term loans and partially pay down its second term loan with the syndicate of PNC Bank and Community & Southern Bank. On September 6, 2013, PNC Bank and Community & Southern Bank entered into an Assignment and Assumption Agreement whereby Community & Southern Bank purchased all of PNC Bank’s rights and obligations under the original Credit Agreement signed on December 23, 2010 between PNC Bank, Community & Southern Bank and Video Display Corporation. Concurrently, Community & Southern Bank and Video Display Corporation entered into the Sixth Amendment to the Credit Agreement and Waiver. The agreement took the remaining balance of the Term Loan A, $1.2 million and re-allocated the Aydin payment such that the outstanding balance of Term Loan A is $1.4 million, terminated the Revolving Loan Commitment, terminated Term Loan B, waived any existing defaults, adjusted the interest rate to 5% (from current 9%), suspended regular Term Loan A Payments, required the Company to pay any working capital adjustment received from the Aydin transaction towards Term Loan A when received, and suspended all financial covenants. On November 27, 2013, Video Display Corporation and Community & Southern Bank entered into the Seventh Amendment to the Credit Agreement. The Amendment set the maturity date of the remaining term loan as the earlier of August 31, 2014 or the sale of any stock, or all, or any material portion of the assets of the Company. The restriction limiting the amount of the Company’s common stock eligible to be repurchased remains at ten percent of the Company’s net earnings after taxes per the third amendment to the Credit Agreement. Management believes conditions are improving, and as mentioned above, the debt with the banks has been reduced to $1.4 million with the proceeds of the sale of Aydin Displays, and the Company has seen significant activity in new quotes and business won. VDC Display Systems has a number of large quotes outstanding which they expect to win in the near future. Additionally, AYON Visual Solutions, a division of the Company, was profitable in the third quarter and has seen increased activity via a number of quotes which should become orders in the fourth quarter of this fiscal year. Management continues to explore opportunities for potential mergers, spinoffs, or other methods of enhancing shareholder value. In the absence of obtaining new funding and/or any potential mergers, spinoffs, sale of the Company as a whole or any other method, management believes continuing and newly generated business as well as the CEO’s commitment to infuse additional capital, if needed, will sustain the Company going forward. The outstanding balance of the line of credit at November 30, 2013 was $0.0 million and the balances of the term loans were $1.4 million and $0.0 million, respectively. The outstanding balance on the line of credit at February 28, 2013 was $9.9 million and the balances of the term loans were $2.0 million and $2.6 million, respectively. These loans are secured by all assets and personal property of the Company and a limited guarantee of the Chief Executive Officer of $3.0 million. The remaining term loan is secured by real estate property of the Company and a building owned by Southeastern Metro Savings, LLC, a company in which the Company’s Chief Executive Officer is a minority owner. The building will continue to be in the collateral pool until such time as the note is sufficiently paid down or it is replaced by other collateral.

Note 2. – Liquidity

On August 30, 2013, Video Display Corporation (the “Company”) completed the sale of the majority of the assets and the transfer of specified liabilities of the Company’s wholly-owned subsidiary, Aydin Displays Inc. (“Aydin”). Aydin’s assets were sold to a newly formed acquisition affiliate of Sparton Corp. for a combination of cash totaling $15 million, plus an additional earn-out potential that could be in excess of $6 million dollars based upon the achievement of reaching certain projected levels of EBITDA generated by the “new” Aydin in the subsequent 12-month period to the August 30, 2013 closing. The sale provisions included a holdback of $1.2 million on the proceeds, which was put in an escrow account until August 30, 2014. The Company shows this as restricted cash on its November 30, 2013 balance sheet. The Company used the proceeds to pay-off the line of credit, one of its term loans and partially pay down its second term loan with the syndicate of PNC Bank and Community & Southern Bank.

On September 6, 2013, PNC Bank and Community & Southern Bank entered into an Assignment and Assumption Agreement whereby Community & Southern Bank purchased all of PNC Bank’s rights and obligations under the original Credit Agreement signed on December 23, 2010 between PNC Bank, Community & Southern Bank and Video Display Corporation. Concurrently, Community & Southern Bank and Video Display Corporation entered into the Sixth Amendment to the Credit Agreement and Waiver. The agreement took the remaining balance of the Term Loan A, $1.2 million and re-allocated the Aydin payment such that the outstanding balance of Term Loan A is $1.4 million, terminated the Revolving Loan Commitment, terminated Term Loan B, waived any existing defaults, adjusted the interest rate to 5% (from current 9%), suspended regular Term Loan A Payments, required the Company to pay any working capital adjustment received from the Aydin transaction towards Term Loan A when received, and suspended all financial covenants. On November 27, 2013, Video Display Corporation and Community & Southern Bank entered into the Seventh Amendment to the Credit Agreement. The Amendment set the maturity date of the remaining term loan as the earlier of August 31, 2014 or the sale of any stock, or all, or any material portion of the assets of the Company. The restriction limiting the amount of the Company’s common stock eligible to be repurchased remains at ten percent of the Company’s net earnings after taxes per the third amendment to the Credit Agreement.

Management believes conditions are improving, and as mentioned above, the debt with the banks has been reduced to $1.4 million with the proceeds of the sale of Aydin Displays, and the Company has seen significant activity in new quotes and business won. VDC Display Systems has a number of large quotes outstanding which they expect to win in the near future. Additionally, AYON Visual Solutions, a division of the Company, was profitable in the third quarter and has seen increased activity via a number of quotes which should become orders in the fourth quarter of this fiscal year.

Management continues to explore opportunities for potential mergers, spinoffs, or other methods of enhancing shareholder value. In the absence of obtaining new funding and/or any potential mergers, spinoffs, sale of the Company as a whole or any other method, management believes continuing and newly generated business as well as the CEO’s commitment to infuse additional capital, if needed, will sustain the Company going forward.

The outstanding balance of the line of credit at November 30, 2013 was $0.0 million and the balances of the term loans were $1.4 million and $0.0 million, respectively. The outstanding balance on the line of credit at February 28, 2013 was $9.9 million and the balances of the term loans were $2.0 million and $2.6 million, respectively. These loans are secured by all assets and personal property of the Company and a limited guarantee of the Chief Executive Officer of $3.0 million. The remaining term loan is secured by real estate property of the Company and a building owned by Southeastern Metro Savings, LLC, a company in which the Company’s Chief Executive Officer is a minority owner. The building will continue to be in the collateral pool until such time as the note is sufficiently paid down or it is replaced by other collateral.