Discontinued Operations

12 Months Ended

Feb. 29, 2016

Discontinued Operations

Note 16. – Discontinued Operations

On March 26, 2014 with an effective date of February 28, 2014, the Company completed the sale of the Company’s wholly-owned subsidiary, Lexel Imaging, Inc. to Citadal Partners, LLC for approximately $3.9 million, consisting of $1.0 million cash payable over 180 days and included in current assets as a note and a guarantee to purchase $2.9 million in inventory over a five year period. The inventory was adjusted to its net realizable value as part of the sale. The Company recognized a loss on the sale of $4.4 million pre-tax during the year ended February 28, 2014. Lexel Imaging, Inc. had net sales of $ 7.6 million and a pre-tax net loss of $0.8 million for the twelve months ending February 28, 2014.

On November 17, 2014 Video Display reacquired Lexel Imaging, Inc when Citadal Partners, LLC defaulted on two notes payable to Video Display Corporation owed as financing on the original sale of the Lexel Imaging. Lexel Imaging is still presented as discontinued operations as Video Display Corporation is still considering offers for the sale of the entity.

Lexel’s net sales, expenses, net profits, operating income and cash flows, are being shown as discontinued operations per ASC 205-20-45 “Reporting Discontinued Operations” for all periods presented.

The summarized financial information for discontinued operations for the year-ended February 29, 2016, and February 28, 2015, is as follows:

	Fiscal 2016		Fiscal 2015
Net sales		6,747		1,543
Cost of goods sold		5,294		1,388
Gross profit		1,453		155
Operating expenses
Selling and delivery		46		—
General and administrative		933		163
Total operating expenses		979		163
Operating profit (loss) from discontinued operations		474		(8	)
Other income		61		75
Interest expense		—		—
Other, net		61		75
Gain on sale of assets		—		—
		61		75
Income from discontinued operations before income taxes		535		67
Income tax expense		7		23
Income from discontinued operations		528		44