10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 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 in its charter)

Georgia	58-1217564
(State of Incorporation)	(IRS Employer Identification No.)
1868 Tucker Industrial Road, Tucker Georgia	30084
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code: (770) 938-2080

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

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES  ☐    NO  ☒

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES  ☐    NO  ☒

Indicate by check mark if 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 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 Securities Exchange Act of 1934).    YES  ☐    NO  ☒

As of August 31, 2018, the aggregate market value of the voting and non-voting common equity held by non-affiliates based upon the closing sales price for the Registrant’s common stock as reported in the Over the Counter Markets “OTCMKTS” was $353,421.

The number of shares outstanding of the registrant’s Common Stock as of May 1, 2019 was 5,878,290.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be delivered to stockholders in connection with our 2019 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K. In addition, certain exhibits previously filed with the registrant’s prior Forms 10-K, Forms 8-K, Form S-18 and Schedule 14A are incorporated by reference in Part IV of this Form 10-K.

VIDEO DISPLAY CORPORATION

TABLE OF CONTENTS

ITEM NUMBER		PAGE NUMBER
	PART I
Item 1.	Business		2
Item 1A.	Risk Factors		5
Item 1B.	Unresolved Staff Comments		8
Item 2.	Properties		8
Item 3.	Legal Proceedings		9
Item 4.	Submission of Matters to a Vote of Security Holders		9
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		10
Item 6.	Selected Financial Data		10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		17
Item 8.	Financial Statements and Supplementary Data		18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		38
Item 9A(T).	Controls and Procedures		38
Item 9B.	Other Information		39
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance		40
Item 11.	Executive Compensation		40
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		40
Item 13.	Certain Relationships and Related Transactions, and Director Independence		40
Item 14.	Principal Accounting Fees and Services		40
	PART IV
Item 15.	Exhibits, Financial Statement Schedules		41
	Signatures		42

PART I

Item 1. Business.

General

Video Display Corporation and subsidiaries (the “Company”, ”us” or “we”) is a provider and manufacturer of video products, components, and systems for visual display and presentation of electronic information media in a variety of requirements and environments. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced display products and systems, from basic components to turnkey systems, for government, military, aerospace, medical, industrial, and commercial organizations. The Company markets its products worldwide primarily from facilities located in the United States. Please read the comments under the caption “Forward looking statements and risk factors” in Item 1A Risk Factors of this Annual Report on Form 10-K.

Description of Principal Business

The Company generates revenues from the manufacturing and distribution of displays and display components. The Company operates primarily in five divisions: simulation and training products, cyber secure products and services, Data display CRTs, broadcast and control center products and other computer products.

Consolidated Net Sales by division for fiscal 2019 are comprised of the following:

Simulation and Training Products (36%)

Cyber Secure Products (36%)

Data Display CRTs (17%)

Broadcast and Control Center Products (1%)

Other Computer Products (10%)

A more detailed discussion of sales by category of product is included under the section entitled “Principal Products by Division.”

The Company’s manufacturing and distribution facilities are located in Kentucky, Georgia and Florida.

The Company continues to explore opportunities to expand its product offerings in the display industry. The Company anticipates that this expansion will be achieved by adding new products or by acquiring existing companies that would enhance the Company’s position in the display industry. Management continually evaluates product trends externally in the industry and internally in the divisions in which the Company operates.

Segment Information

We operate and manage our business as one segment. The five divisions have similarities such as the types of products and markets served. Therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, are reported as one segment within the Consolidated Financial Statements.

Principal Products by Division

Simulation and Training Products

The Company’s simulation and training products operations are conducted in Cocoa, Florida’s VDC Display Systems (Display Systems).

This portion of the Company’s operations, which contributed approximately 36% of fiscal 2019 consolidated net sales, involves the design, engineering, and manufacture of digital projector display units. The Company customizes these units for specific applications, including ruggedization for military uses or size reduction due to space limitations in industrial and medical applications. Because of the Company’s flexible and cost efficient manufacturing, it is able to handle low volume orders that generate higher margins.

This portion of the Company’s operations targets niche markets where competition from major multinational electronics companies tends to be lower. The prime customers for these products include defense, security, training, and simulation areas of the United States of America (U.S.) and foreign militaries as well as the major defense contractors such as the Boeing Company, L-3 Communications Corporation, Lockheed Martin Corporation, and others. Flight simulator displays are produced to provide a full range of flight training simulations for military and commercial applications.

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Cyber Secure Products

The Company acquired the AYON Cyber Security (“ACS”) division in March 2012. ACS was formerly known as Hetra Products and most recently as StingRay56 before becoming part of Video Display Corporation. ACS specializes in advanced TEMPEST technology, also known as Emanation Security (EMSEC), products and custom engineering solutions to include extreme environmental performance and survivability technologies (MIL-STD-810 and DO-160) in support of military forces, intelligence agencies, prime contractors and niche commercial sectors worldwide. ACS has a long history of specializing in TEMPEST technology. In addition to its TEMPEST products and services, the business also provides various contract services to government agencies and prime contractors. Services performed include design and testing solutions for defense and niche commercial uses worldwide. ACS has office in the U.S., a representative in Canada, a Reseller Relationship/Partner in Europe and technology partners around the globe. This division represented approximately 36% of fiscal 2019 consolidated net sales.

Data Display CRTs

Since its organization in 1975, the Company has been engaged in the distribution and original equipment manufacturers (OEMs) of Cathode ray tubes (CRTs) using new and recycled CRT glass bulbs, primarily in the replacement market, for use in data display screens, including computer terminal monitors, medical monitoring equipment and various other data display applications and in television sets.

The Company’s CRT manufacturing operation of new and recycled CRTs is conducted at a facility located in Lexington, Kentucky (Lexel). The Company’s Tucker, Georgia location is the Company’s primary distribution point for data display CRTs purchased from outside sources.

The Company maintains the capability of manufacturing a full range of monochrome CRTs as well as remanufacturing color CRTs from recycled glass. In addition, our Lexel operations manufactures a wide range of radar, infrared, camera and direct-view storage tubes for military and security applications. All CRTs manufactured by the Company are tested for quality in accordance with standards approved by Underwriters Laboratories.

The Company also distributes new CRTs and other electronic tubes purchased from OEMs. The Company sells CRTs into the replacement market which sometimes takes five to seven years to develop; these purchased inventories sometimes do not sell as quickly as other inventories. Bulk CRT purchases have declined over the past few years as the Company is managing current inventory levels against the anticipated reduction in future CRT demand due to the growth of flat panel technology.

The Company maintains an internal sales organization to sell directly to OEMs and their service organizations.

In addition to factors affecting the overall market for such products, the Company’s sales volume in the CRT replacement markets is dependent upon the Company’s ability to provide prompt response to customers’ orders, while maintaining quality control and competitive pricing. The Data Display division represented approximately 17% of fiscal 2019 consolidated net sales.

Broadcast and Control Center Products

The Company began a start-up operation in July 2011, AYON Visual Solutions, as the North American distributor of a German company, eyevis GmbH. The division sells high-end visual display products for use in video walls and command and control centers.

The division has been built thus far by partnering with consultants and system integrators. These partners have first-hand knowledge of the needs of the market and have been educated about the division’s products. Management believes the division will continue to grow by expanding their network of partners and product offerings as eyevis GmbH introduces new products. This division represented approximately 1% of fiscal 2019 consolidated net sales. This division was absorbed by the simulation and training products division in the Company’s fourth quarter to increase opportunities by using the resources available in the simulation division.

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Other Computer Products

The Company acquired a small keyboard company on October 23, 2017. The Company long term plans are to use this as a platform to manufacture cyber-secure keyboards as part of the cyber security division. This division was 10% of the 2019 consolidated net sales.

Patents and Trademarks

The Company holds patents with respect to certain products and services. The Company also sells products under various trademarks and trade names. The Company believes that success in its industry primarily will be dependent upon incorporating emerging technology into new product line introductions, frequent product enhancements, and customer support and service.

Seasonal Variations in Business

Historically, there has not been seasonal variability in the Company’s business.

Working Capital Practices

Currently, the Company has a $0.5 million line of credit with the Brand Banking Company with no amounts outstanding at February 28, 2019. The other outstanding debt of the Company includes a $0.1 million note secured by a building owned by the Company’s subsidiary, Teltron Technologies, Inc. in Birdsboro, PA., $0.1 million on a note payable associated with the acquisition of Unicomp, a keyboard manufacturer and $0.1 million on a note with the CEO of the Company.

Management has implemented a plan to improve the liquidity of the Company. The Company has been implementing a plan to increase revenues at all the divisions, each structured to the particular division with an increase in revenues of over $3.0 million for fiscal year ended February 28, 2019. The Company is expanding its cyber secure 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 is also now involved in ruggedized displays, recently bringing on engineering familiar with these products. The Company implemented a plan to reduce expenses at the divisions, as well as at the corporate location during the fiscal year ending February 28, 2019 with the closing of two divisions and relocating the operations of those two divisions to other divisions within the Company with similar business activities. The Company is also in the process of moving the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The Company moved two of its plants in an effort to reduce expenses and increase efficiencies. The plant move at its subsidiary in Lexington, Kentucky, took longer than anticipated and negatively affected cash flow. The long term prospects for this subsidiary are promising and management is now seeing a turn around. The plant move at the Florida operations was successful as the Company merged two businesses and was able to keep production on schedule. 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 Company is currently operating using cash from operations and investing activities. The Company has a $3.5 million working capital balance at February 28, 2019, including $0.4 million in liquid assets.

Concentration of Customers

The Company sells to a variety of domestic and international customers on an open-unsecured account basis. These customers principally operate in the medical, military, industrial and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs that comprised approximately 53% and 50% of consolidated net sales for fiscal 2019 and 2018, respectively. Sales to foreign customers were approximately 11% and 16% of consolidated net sales for fiscal 2019 and 2018, respectively. The Company had three customers, E-Tel 19%, Lockheed Martin 14%, and the US Department of State 12% of the Company’s consolidated net sales in fiscal 2019. The Company attempts to minimize credit risk by reviewing customers’ credit history before extending credit, and by monitoring customers’ credit exposure on a daily basis. The Company establishes an allowance for doubtful accounts receivable based upon factors surrounding the credit risk of specific customers, historical trends and other information.

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Backlog

The Company’s backlog is comprised of undelivered, firm customer orders, which are scheduled to ship within eighteen months. The Company’s backlog was approximately $ 5.5 million at February 28, 2019 and $7.4 million at February 28, 2018. It is anticipated that more than 90% of the February 28, 2019 backlog will ship during fiscal 2020.

Environmental Matters

The Company’s operations are subject to federal, state, and local laws and regulations relating to the generation, storage, handling, emission, transportation, and discharge of materials into the environment. The costs of complying with environmental protection laws and regulations have not had a material adverse impact on the Company’s consolidated financial condition, results of operations, or cash flow in the past and are not expected to have a material adverse impact in the foreseeable future.

Research and Development

The objectives of the Company’s research and development activities are to increase efficiency and quality in its manufacturing and assembly operations and to enhance its existing product line by developing alternative product applications to existing display systems and electron optic technology.

Employees

As of February 28, 2019, the Company employed 83 persons on a full-time basis. Of these, 15 were employed in executive, administrative, and clerical positions, 5 were employed in sales and distribution, 14 in engineering, and 49 were employed in manufacturing operations. The Company believes its employee relations to be satisfactory.

Competition

The Company believes that it has a competitive advantage in the display industry due to its ability to engineer custom display solutions for a variety of industrial, military and commercial applications, its ability to provide internally produced component parts, and its manufacturing flexibility. As a result, the Company can offer more customization in the design and engineering of new products. With the operations of VDC Display Systems, AYON Visual Solutions and AYON Cyber Security, the Company believes it has become one of the leading suppliers within each of these specialty display markets.

The Company now operates in several markets in the areas of custom electronic solutions. The Company has reentered the ruggedized display business and is actively looking to grow this business. The Company’s VDC Display Systems division specializes in projector design and video solutions, and the Company’s AYON Cyber Security division specializes in making electronic devices cyber secure. The Company specializes in the design and installation of video walls focusing on configurable visual solutions for command and control and other large format visuals in the energy, utility, transportation, industrial and security markets.

The Company is a wholesale distributor and manufacturer of OEM CRTs. The Company believes it is the only company that offers complete service in replacement markets with its manufacturing and recycling capabilities. The Company’s ability to compete effectively in this market is dependent upon its continued ability to respond promptly to customer orders and to offer competitive pricing.

Item 1A. Risk Factors.

Forward looking statements and risk factors

All statements other than statements of historical facts included in this report, including, without limitation, those statements contained in Item 1, are statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934. The words “expect”, “estimate”, “anticipate”, “predict”, “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. Such statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) trends affecting the Company’s consolidated financial condition, results of operations or cash flows; (ii) the Company’s financing plans; (iii) the Company’s business and growth strategies,

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including potential acquisitions; and (iv) other plans and objectives for future operations. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those predicted in the forward-looking statements or which may be anticipated from historical results or trends.

Our Company operates in technology-based markets that involve a number of risks, some of which are beyond our control. The following discussion highlights some risks and uncertainties that investors should consider, in conjunction with all other information in this Annual Report on Form 10-K. Additional risks and uncertainties not presently known to the Company may impair the Company’s business and operations. If any of the following risks actually occur, the Company’s business, consolidated financial condition, cash flows, or results of operations could be materially affected.

History of losses and declining liquidity

Declining liquidity and lack of credit availability could have important consequences, including:

• generating insufficient cash flows from operating activities to meet our payment obligations;

• increasing our vulnerability to general economic and industry conditions;

• requiring a substantial portion of cash flow for operating activities and as a result reducing our ability to use our cash flow to fund capital expenditures, capitalize on future business opportunities and expand our business and execute our strategy;

• causing us to make non-strategic divestitures;

• limiting our ability to adjust to changing market conditions and to react to competitive pressure and placing us at a competitive disadvantage compared to our competitors who may have access to a line of credit.

Changes in government priorities may affect military spending, and our consolidated financial condition and results of operations or cash flows could suffer if their purchases decline.

We currently derive a portion of our net sales (53% in fiscal 2019) from direct and indirect sales to the U.S. government. If we are unable to replace expiring contracts, which are typically less than twelve months in duration, with contracts for new business, our sales could decline, which would have a material adverse effect on our business, consolidated financial condition, results of operations, or cash flows. We expect that direct and indirect sales to the U.S. government will continue to account for a substantial portion of our sales in the foreseeable future. We have no assurance that these government-related sales will continue to reach or exceed historical levels in future periods.

Our inability to secure financing could negatively affect the future of our business.

• Our inability to secure financing with our current bank or others, if necessary, could expose us to the risk of losing business; and

• Our inability to secure financing with a commercial bank could expose us to the risk of increased interest rates.

Our industry is highly competitive and competitive conditions may adversely affect our business.

Our success depends on our ability to compete in markets that are highly competitive, with rapid technological advances and products that require constant improvement in both price and performance. In most of our markets, we are experiencing increased competition, and we expect this trend to continue. This environment may result in changes in relationships with customers or vendors, the ability to develop new relationships, or the business failure of customers or vendors, which may negatively affect our business. If our competitors are more successful than we are in developing new technology and products, our business may be adversely affected.

Competitive pressures may increase or change through industry consolidation, entry of new competitors, marketing changes or otherwise. There can be no assurance that the Company will be able to continue to compete effectively with existing or potential competitors.

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Competitors or third-parties may infringe on our intellectual property.

The Company holds patents with respect to certain products and services. The Company also sells products under various trademarks and trade names. Should competitors or third-parties infringe on these rights, costly legal processes may be required to defend our intellectual property rights, which could adversely affect our business.

Migration to flat panel and other technology may negatively affect our CRT business.

The Company acquires CRT inventory when the replacement market appears to demonstrate adequate future demand and the purchase price allows a reasonable profit for the risk. Due to the extended time frame for the replacement market to develop (five to seven years), these purchased inventories may not sell as quickly as other inventories. If the Company is unable to manage CRT inventory levels in coordination with reduced future CRT demand due to the growth of flat panel technology, the marketability of inventory on hand may be affected and the Company may incur significant costs in the disposal of excess inventory.

The Company anticipates that flat panel and other technology products, due to their lower space and power requirements, has become the display of choice in many display applications. Given this shift, the Company has focused its efforts and its acquisition strategy toward flat panel technologies. If the Company is unable to replace any future declines in CRT sales with products based on other technologies, our business may be adversely affected.

Future acquisitions may not provide benefits to the Company.

The Company’s growth strategy includes expansion through acquisitions that enhance the profitability and shareholder value of the Company. The Company continues to seek new products through acquisitions and internal development that complement existing profitable product lines. There can be no assurance that the Company will be able to complete further acquisitions or that past or future acquisitions will not have a material adverse impact on the Company’s consolidated operations.

If we are unable to retain certain key personnel and hire new, highly-skilled personnel, we may not be able to execute our business plan.

Our future success depends on the skills, experience, and efforts of our senior managers. The loss of services of any of these individuals, or our inability to attract and retain qualified individuals for key management positions, could negatively affect our business.

Our business operations could be disrupted if our information technology systems fail to perform adequately.

We depend upon our information technology systems in the conduct of our operations and financial reporting. If our major information systems fail to perform as anticipated, we could experience difficulties in maintaining normal business operations. Such systems-related problems could adversely affect product development, sales, and profitability.

Changes to accounting rules or regulations may adversely affect our results of operations.

New accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. Future changes to accounting rules or regulations or the questioning of current accounting practices may adversely affect our consolidated financial condition or results of operations.

The Company’s stock price may be negatively affected by a variety of factors.

In addition to any impact the Company’s operating performance, potential future Company sales or repurchases of common stock, the Company’s dividend policies or possible anti-takeover measures available to the Company may have, changes in securities markets caused by general foreign or domestic economic, consumer or business trends, the impact of interest rate policies by the federal reserve board, and other factors outside the Company’s control may negatively affect our stock price.

Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid price if you need to sell your shares.

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Our stock is quoted on the OTC Markets and the shares of our common stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our common stock or to sell his or her shares at or near bid prices, if at all.

Changes to estimates, or operating results that are lower than our current estimates, may cause us to incur impairment charges.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying value, then it applies the processes prescribed in FASB ASC Topic 360 “Property, Plant, and Equipment.” We make certain estimates and projections in connection with our impairment analyses for other long-term assets. If these estimates or projections change or prove incorrect, we may be required to record impairment charges. If these impairment charges were significant, our consolidated financial position or results of operations would be adversely affected.

International factors could negatively affect our business.

A significant portion of our consolidated net sales (11% in fiscal 2019) is made to foreign customers. We also receive a significant amount of our raw materials from foreign vendors. We are subject to the risks inherent in conducting our business across national boundaries, many of which are outside of our control. These risks include the following:

• Economic downturns;

• Currency exchange rate and interest rate fluctuations;

• Changes in governmental policy or laws including, among others, those relating to taxation;

• International military, political, diplomatic and terrorist incidents;

• Government instability;

• Nationalization of foreign assets;

• Natural disasters; and

• Tariffs and governmental trade policies.

We cannot ensure that one or more of these factors will not negatively affect our international customers and, as a result, our business and consolidated financial performance.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company leases its corporate headquarters at 1868 Tucker Industrial Road in Tucker, Georgia (within the Atlanta metropolitan area). Its headquarters occupy approximately 10,000 square feet of the total 59,000 square feet at this location. The Company entered into an agreement to sublease approximately 45,000 square feet of the Tucker, Georgia facility beginning January, 2019. Two locations, Cocoa, Florida and Lexington, Kentucky are leased from a related party at current market rates. See Part III, Item 13 Certain Relationships and Related Transactions in this Annual Report on Form 10-K. Management believes the facilities to be adequate for its needs.

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The following table details manufacturing, warehouse, and administrative facilities:

Location	Square Feet		Lease Expires
Tucker, Georgia		59,000	March 31, 2022
Birdsboro, Pennsylvania		40,000	Company Owned (a)
Lexington, Kentucky		40,000	June 30, 2022
Cocoa, Florida		34,500	February 19, 2025

(a) The Birdsboro, Pennsylvania property secures mortgage loans from a bank with a principal balance of $0.1 million as of February 28, 2019. This mortgage loan bears an interest rate of approximately 6%. Monthly principal and interest payments of approximately $5,000 are payable through July 2019.

Item 3. Legal Proceedings.

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.

Item 4. Submission of Matters to a Vote of Security Holders.

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report.

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Video Display Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands)

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

The Company’s common stock is traded on the Over the Counter Market (OTCMKTS) under the symbol VIDE. The Company had previously traded on National Association of Securities Dealers Automated Quotation System (“NASDAQ”) national market system under the symbol VIDE until April 30, 2015.

The following table shows the range of prices for the Company’s common stock as reported by NASDAQ and the OTCMKTS for each quarterly period beginning on March 1, 2017. The prices reflect inter-dealer prices, without mark-up, mark-down, or commission, and may not necessarily represent actual transactions.

	For Fiscal Years Ended
	February 28, 2019				February 28, 2018
Quarter Ended	High		Low		High		Low
May		1.03		.69	$	1.25	$	0.91
August		1.15		.93		1.26		0.90
November		1.07		.94		1.15		1.00
February		1.00		.83		1.68		0.85

There were approximately 120 holders of record of the Company’s common stock as of May 15, 2019.

Payment of cash dividends in the future will be dependent upon the consolidated earnings and financial condition of the Company and other factors that the Board of Directors may deem appropriate.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of February 28, 2019 regarding compensation plans (including individual compensation arrangements) under which common stock of the Company is authorized for issuance.

Stock Option Plan	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders		200,000	$	0.82		614,000

Issuer Purchases of Equity Securities

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 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. During the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares at an average price of $1.12 per share, which were added to treasury shares on the consolidated balance sheet. Under this program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 28, 2019. During the fiscal year ended February 28, 2018, the Company purchased 3,600 shares of Video Display Corporation stock.

Item 6. Selected Financial Data

N/A

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Item 7. 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, and industrial applications including ruggedized displays.

• Cyber Secure Products – provides 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 keyboard products with a plan to manufacture and offer cyber-secure keyboards as part of the cyber secure products division.

During fiscal 2019, management of the Company focused key resources on strategic efforts to support the efforts of operations to increase market share. The Company also seeks to look for acquisition opportunities that enhance the profitability and shareholder value of the Company. The Company continues to seek new products through acquisitions and internal development that complement existing profitable product lines. Challenges facing the Company during these efforts include:

Inventory management - The Company monitors its inventory for obsolescence due to the rapid changes in display technology. The Company increased the inventory reserves $0.3 million in the fiscal year ending February 28, 2019 and disposed of $0.9 million in various raw material parts and demo equipment at its VDC Display division and AYON Cyber Security divisions.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company provides for an obsolescence 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, 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 February 28, 2019 to be adequate.

Operations

The following table sets forth, for the fiscal years indicated, the percentages that selected items in the Company’s consolidated statements of operations bear to total revenues (amounts in thousands):

(See Item 1. Business – Description of Principal Business and Principal Products for discussion about the Company’s Products and Divisions.)

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	2019						2018
	Amount			%			Amount			%
Net Sales
Simulation and Training		5,406			36.0	%	$	4,827			40.4	%
Data Display CRTs		2,533			16.9			3,287			27.5
Broadcast and Control Centers		189			1.3			1,011			8.5
Cyber Secure Products		5,460			36.3			2,283			19.1
Other Computer Products		1,435			9.5			536			4.5
Total Company		15,023			100.0			11,944			100.0
Costs and expenses
Cost of goods sold	$	10,983			73.1	%	$	11,354			95.1	%
Selling and delivery		844			5.6			967			8.1
General and administrative		3,645			24.3			3,291			27.5
	15,472			103.0			15,612			130.7
Loss from operations		(449	)		(3.0	)		(3,668	)		(30.7	)
Interest income (expense)		(19	)		(0.1	)		(20	)		(0.2	)
Investment gain (loss)		42			0.2			17			0.2
Other income, net		493			3.4			733			6.1
Income (loss) before income taxes		67			0.5			(2,938	)		(24.6	)
Income tax expense		—			—			—			—
Net (loss)		67			0.5		$	(2,938)			(24.6	)%

Fiscal 2019 Compared to Fiscal 2018

Net Sales

Consolidated net sales increased 25.8% for year ended February 28, 2019 compared to the year ended February 28, 2018 and increased 9.1% for the three months ended February 28, 2019 compared to the comparable three months last year. The Company’s AYON Cyber Security (ACS) division is up 139.1% for the year ending February 28, 2019 compared to fiscal year ended February 28, 2018 and increased 569.3% for the three months ended February 28, 2019 compared to the same three months last year. Their business has been steadily growing over the past year and their backlog was $0.7 million at February 28, 2019. ACS had two customers who did over ten percent of the total Company’s business with E-Tel and the US Department of State. ACS did 36% of the Company’s business. The Display Systems division was up by 12.0% for the year ended February 28, 2019 compared to last year and down 59.6% for the quarter ended February 28, 2019 compared to the same three months last year. The division had strong sales with their top customer, Lockheed Martin and with a large government contract this year. They are working on other projects with Lockheed Martin and expect to continue to do well with this account. The Data Display division showed a decrease of 22.9% for the year ended February 28, 2019 due to decreases throughout their customer base, the completion of a large long term order with a foreign customer by the Lexel division, and the sale of certain assets of the Lexel division. The Lexel division will expect less revenues going forward as certain assets and business were sold in June, 2017 and the division is also uncertain of orders from one of their large customers. Lexel had an increase of 471.3% for three months ended February 28, 2019 compared to the three months ended February 28, 2018. They have received some large orders from foreign customers which should help with their sales into the next fiscal year. AYON Visual Solution’s (AVS) sales decreased by 81.3% for the year ended February 28, 2019. This division’s sales are primarily driven by large contracts. It had none in the fiscal year ended February 28, 2019. The division did receive a large contract of $1.3 million which will ship in the next fiscal year. The division’s primary supplier was sold to a competitor of the Company, so the future of this division is uncertain. AVS does have a certain amount of potential business in the works. The AVS division was absorbed by the Display Systems division in the Company’s fourth quarter to increase efficiencies. The other increase in sales was from the Company’s new keyboard division, which posted sales of $1.4 million and $0.4 million for the year and three months ended February 28, 2019 respectively. The Company acquired this company in October of 2017. This division is expected to continue at this level of sales each quarter.

The Company has transitioned into a video display solutions company, but still services the existing CRT markets, which overall account for approximately 17% of the Company’s revenues. The Company’s largest remaining divisions are VDC Display Systems, which services the simulation and training markets and ACS, which designs and manufactures tempest products . VDC Display Systems sales increased by 12.0% in fiscal 2019 compared to fiscal 2018, $5.4 million in fiscal 2019 to $4.8 million in fiscal 2018. ACS sales increased by 139.1% in fiscal 2019 compared to fiscal 2018. $5.5 million in fiscal 2019 to $2.3 million in fiscal 2018. The division is expected to improve this next fiscal year due to new business in the government-related sector and by expanding its product offerings.

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Gross Margins

Consolidated gross margins increased to 26.9% for fiscal 2019 from 4.9% for fiscal 2018. Overall gross margin dollars increased by $3.5 million versus the prior fiscal year due to higher revenues, lower costs and improvements realized in the management of inventory.

The two Florida divisions performed well as the move to one facility is showing results. Both divisions showed large increases in both their gross margin percentage to sales and in actual dollars. AYON Cyber Security (ACS) gross margin percentage was 46.7% compared to 16.4% and the gross margin dollars were $2,551 thousand compared to $375 thousand for the year ended February 28, 2019 compared to the year ended February 28, 2018. For the three months ended February 28, 2019 compared to the same period last year, ACS gross margin percentage was 41.7% compared to (124.9)% and gross margin dollars were $483 thousand compared to ($216) thousand. VDC Display Systems (VDCDS) gross margin percentage was 9.7% compared to 9.2% in the prior year and the gross margin dollars were $522 thousand compared to $444 thousand for the year ended February 28, 2019 compared to the year ended February 28, 2018. For the three months ended February 28, 2018 compared to the same period last year, VDCDS gross margin percentage was 3.91% compared to 15.4%. Gross margin dollars were $38 thousand compared to $366 thousand. The new keyboard division, Unicomp, had $558 thousand of gross margin dollars or 38.9% to sales for the year ended February 28, 2019 and $91 thousand of gross margin dollars or 24.8% for the three months ended February 28, 2019.

The other two divisions had an erosion of margins due to poor sales as discussed in the sales section above. The Data Display division had $352 thousand in gross margin dollars and the AYON Visual Solution (AVS) division had $57 thousand for the year ended February 28, 2019. The Data Display division had $457 thousand in gross margin dollars for the three months ended February 28, 2019. The Data Division is expected to do better in the next quarter as the Lexel facility is expected to do better as a result of the foreign orders discussed in the sales section above. AVS division has been absorbed in the VDCDS division and has received the large order for a video wall for a major electrical company. It is scheduled to be installed in the Company’s next fiscal year.

Operating Expenses

Operating expenses as a percentage of sales decreased from 35.7% for fiscal 2018 to 29.9% for fiscal 2019 primarily reflecting a 25.8% increase in sales with only a 5.4% increase in expenses. Actual operating expenses were $4.3 million in fiscal 2018 and $4.5 million in fiscal 2019.

The Company is working to reduce costs in all areas of the business to bring its cost structure in line with the current size of the business. The Company has made strategic cuts at the corporate level and has merged its two Florida locations, VDC Display Systems and AYON Cyber Security, which is saving considerable operating expenses. The Company is expanding its product offerings and in doing so, is adding costs strategically to support those businesses. The Florida operations are completely in the Cocoa location. The remaining business units are also making changes to maximize profitability.

Interest Expense

Interest expense was $19 thousand for fiscal 2019 and $20 thousand for fiscal 2018 related to the Company’s obligations. The marginal decrease in interest expense results from a lower average in debt obligations outstanding.

Other Income, net

In fiscal 2019, the Company earned $0.5 million in other income, primarily due to rental income of $191 thousand, $130 thousand in royalty income, scrap sales of $108 thousand and $33 thousand in gain on sale of assets. In fiscal 2018, the Company earned $0.7 million in other income, primarily due to the gain on sale of certain assets of Lexel Imaging of $0.3 million, $0.3 million in royalty income and $0.1 million in rental income.

Income Taxes

The difference between the statutory rate and the effective rate is primarily due to the valuation allowances on the deferred tax assets and the change in the corporate tax rates from the new tax law. The Company had a profit before taxes of $0.1 million, but a net tax loss of approximately $0.2 million. The Company had net loss before taxes of approximately $2.9 million and an income tax benefit of $0.8 million before the valuation allowance of $0.8 million for fiscal 2018, an effective rate of (0%).

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Liquidity and Capital Resources

The accompanying 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 had sustained losses for each of the three prior years, but did record a profit for the current fiscal year and has seen an increase in both its working capital and liquid assets during this current year. The historical reported losses were a combination of low revenues at all divisions without a commensurate reduction of expenses. This year, the Company did increase sales and reduced certain expenses compared to the previous year. The Company’s working capital and liquid asset position related to the years ended February 28, 2019 and 2018 are presented below:

	February 28, 2019		February 28, 2018
Working capital	$	3,354	$	2,762
Liquid assets	$	410	$	261

Management has implemented a plan to improve the liquidity of the Company. The Company has been implementing a plan to increase revenue at all the divisions, each structured to the particular division with an increase in revenues of over $3.0 million for fiscal year ended February 28, 2019. The Company is expanding its cyber secure 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 is also now involved in ruggedized displays, recently bringing on engineering familiar with these products. The Company implemented a plan to reduce expenses at the divisions, as well as at the corporate location during the fiscal year ending February 28, 2019 with the closing of two divisions and relocating the operations of those two divisions to other divisions within the Company with similar business activities. The Company is also in the process of moving the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The Company moved two of its plants in an effort to reduce expenses and increase efficiencies. The plant move at its subsidiary in Lexington, Kentucky, took longer than anticipated and negatively affected cash flow. The long term prospects for this subsidiary are promising and management is now seeing a turn around. The plant move at the Florida operations was successful as the Company merged two businesses and was able to keep production on schedule. 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 management’s plans to improve the operational effectiveness of the operations, to sell strategic assets as noted above, 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 provided by operations was $0.2 million in fiscal 2019 and 0.8 million in fiscal 2018. During fiscal 2019, the net income from operations was $0.1 million and adjustments to reconcile net income to net cash were $0.5 million to reduce inventory reserves, by $0.1 in investment gains offset by $0.3 million in depreciation. Working capital related accounts generated $0.5 million in cash with the related changes in account balances outlined on the statements of cash flows.

During fiscal 2018, the net loss from operations was $2.9 million and adjustments to reconcile net loss to net cash were $0.7 million, including $0.5 million to increase net inventory reserves, and $0.3 million in depreciation. Changes in working capital provided $3.0 million.

Investing activities provided $0.4 million in fiscal 2019 and used $0.7 million of cash in fiscal 2018. For fiscal 2019, proceeds from the sale of investments net costs to acquire provided $0.3 million in cash. Also, $0.2 million in cash was provided from the sale of an investment in a real estate partnership. These sources of cash were partially offset by capital expenditures. The Company is expected to invest an additional $0.1 million to upgrade the Cocoa, Florida location to accommodate the merger of the two Florida businesses into one facility in fiscal 2020. The Company does not anticipate any additional significant investments in capital assets for fiscal 2019 beyond normal maintenance requirements.

Investing activities in fiscal 2018 consisted of the sale of investment securities of $2.5 million, the purchase of investment securities of $2.3 million, capital expenditures of $0.5 million, the purchase of an interest in a real estate partnership (net of cash received resulting from subsequent disposition of partial ownership) of $0.4 million and the acquisition of Unicomp of $0.1 million.

Financing activities used were $0.3 million for the year ended February 28, 2019. Proceeds from related party notes and from the line of credit provided cash of $1 million offset by related payments on these obligations approximating $1.2 million along with $0.1 in margin payments. Financing activities used were $76 thousand in fiscal 2018, primarily resulting from the repayment of debt and related party notes.

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,

14

depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program. During the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares of Company stock at an average price of $1.12 per share, and during the fiscal year ended February 28, 2018, the Company repurchased 3,600 shares of Company stock at an average price of $1.24 per share. Under this program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 28, 2019.

Transactions with Related Parties, Contractual Obligations, and Commitments

The Company leases one building from the Company’s CEO in Lexington, KY (Honeyhill Properties) and one building owned by Ordway Properties LLC in Cocoa, Florida. The building in Lexington, KY serves as the manufacturing operations for the CRT division. The building in Cocoa, Florida is the new operational site for both VDC Display Systems and AYON Cyber Security. See Note 9.

The Company also borrows money from the Chief Executive Officer on a short term basis when funds are needed. See Note 4. On March 30, 2016 Video Display Corporation entered into an assignment with recourse of their note receivable from Z-Axis, Inc. with Ronald D. Ordway and Jonathan R. Ordway for the sum of $912 thousand. The Company also retains the right to repurchase the note at any time for 80% of the outstanding principle balance. In the event of default by Z-Axis, the Company is obligated to repurchase the note for 80% of the remaining balance plus any accrued interest.

Contractual Obligations

Future contractual maturities of long-term debt, future contractual obligations due under operating leases, and other obligations at February 28, 2019 are as follows (in thousands):

	Payments due by period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Long-term debt obligations	$	239	$	239	$	—	$	—	$	—
Interest obligations on long-term debt (a)		1		1		—		—		—
Operating lease obligations		2,373		577		1,145		461		190
Warranty reserve obligations		37		37		—		—		—
Total	$	2,650	$	854	$	1,145	$	461	$	190

(a) This line item was calculated by utilizing the effective rate on outstanding debt as of February 28, 2019.

In addition, refer to Note 4 as it relates to the note receivable and corresponding related obligations pertaining to Z-Axis which are not included in the chart above.

Critical Accounting Estimates

Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations are based upon the Company’s consolidated financial statements. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and related notes. The accounting policies that may involve a higher degree of judgments, estimates, and complexity include reserves on inventories, contract revenue recognition as well as profitability or loss recognition estimates, and the sufficiency of the valuation reserve relating 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. In fiscal 2019, the Company increased the inventory reserves by $0.3 million, but wrote off $0.9 million of inventory against the reserve primarily at VDC Display Systems. The Company determined VDC Display Systems is the most vulnerable to inventory obsolescence due to the size and age of its inventory and the changes in its market segment. In fiscal 2018, the Company disposed of $1.2 million of inventory, reported $0.7 million direct write-offs with $0.5 million against the reserve as management reduced inventories that were held for legacy repairs. The reserve for inventory obsolescence was approximately $0.9 million and $1.4 million at February 28, 2019 and February 28, 2018, respectively.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company provides monthly for an obsolescence 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, although it believes the inventory will be sold in the future, will continue to reserve for any additional obsolescence.

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There have been significant changes in management’s estimates in fiscal 2019 and 2018 due to the rapidly changing business conditions in the display markets and the Company adjusted its reserves based on the remaining inventories and the remaining businesses it operates. The Company cannot guarantee the accuracy of future forecasts since these estimates are subject to change based on market conditions.

Revenue recognition

See new accounting standards for the Company’s revenue recognition policies.

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 can reasonably be estimated. 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.

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. The Company has established a valuation allowance of $5.8 million on the Company’s current and non-current deferred tax assets.

The Company accounts for uncertain tax positions under the provisions of ASC Topic 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 February 28, 2019, the Company did not record any liabilities for uncertain tax positions.

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 can reasonably be estimated. 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.

Recent Accounting Pronouncements

Effective March 1, 2018 we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and the additional related ASUs (codified in “ASC 606”), which replaces existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under GAAP. We elected the modified retrospective method upon adoption (applied to those contracts which were not completed as of March 1, 2018) with no impact to opening retained earnings or revenue reported. Results of reporting periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the previous revenue recognition standard (ASC 605).

In February 2016, the FASB issued ASU 2016-02, “Leases”. The final guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840, Leases. It is effective for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. We plan to adopt the new standard effective March 1, 2019 using the modified retrospective approach, which allows application of the standard at the adoption date rather than at the beginning of the earliest comparative period presented. We expect to elect the package of available practical expedients that will enable us to retain the lease classification and initial direct costs for any leases that existed prior to the adoption of the standard and will not reassess whether any contracts executed prior to the adoption of the standard are or contain leases. We expect that the adoption of this standard will result in the recognition of material right-of-use assets and corresponding liabilities in our consolidated balance sheets, but do not expect the adoption to have a material impact on our consolidated statements of operations or our consolidated statements of cash flows. The adoption of this standard will result in expanded lease related disclosures in the notes to our consolidated financial statements. While we are currently evaluating the final impact the adoption of this standard will have, we have identified existing lease contracts, have prepared and reviewed the necessary entries for the transition, and are updating our controls and procedures for leases under the new standard.

16

Impact of Inflation

Inflation has not had a material effect on the Company’s results of operations to date.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company’s primary market risks include changes in technology and government spending. The rapid advances in video and projection technology present a challenge for the Company’s management and engineers to be able to meet the ever changing demands in the markets in which it operates. The Company did a significant amount of business with the government (53% of revenues) in fiscal 2019. Failure of the government to continue to fund programs in the Company’s markets could have a detrimental effect on the Company.

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Item 8. Financial Statements and Supplementary Data.

Video Display Corporation and Subsidiaries

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm	19
Consolidated Balance Sheets as of February  28, 2019 and February 28, 2018	20
Consolidated Statements of Operations for the years ended February  28, 2019 and February 28, 2018	22
Consolidated Statements of Shareholders’ Equity for the years ended February 28, 2019 and February 28, 2018	23
Consolidated Statements of Cash Flows for the years ended February  28, 2019 and February 28, 2018	24
Notes to Consolidated Financial Statements	25

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Report of Independent Registered Public Accounting Firm

To the Board of Directors

Video Display Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Video Display Corporation and subsidiaries (the Company) as of February 28, 2019 and 2018, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended February 28, 2019, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 28, 2019 and 2018, and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has historically reported net losses or breakeven results along with reporting low levels of working capital and liquid assets. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 1. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Hancock Askew & Co., LLP

We have served as the Company’s auditor since 2017.

Norcross, Georgia

May 29, 2019

19

Video Display Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands)

	February 28,			February 28,
	2019			2018
Assets
Current assets
Cash and cash equivalents	$	410		$	81
Trading investments, at fair value		—			180
Accounts receivable, less allowance for bad debts of $16 and $19		1,746			664
Notes receivable due from officers and directors, current (Note 4)		209			191
Inventories, net		3,451			4,584
Prepaid expenses and other current assets		476			65
Total current assets		6,292			5,765
Property, plant and equipment:
Land		154			154
Buildings		2,760			2,799
Construction in progress		73			—
Machinery and equipment		5,732			5,753
		8,719			8,706
Accumulated depreciation		(7,398	)		(7,243	)
Net property, plant and equipment		1,321			1,463
Notes receivable due from officers and directors, noncurrent (Note 4)		189			398
Investment in real estate partnership – related party (Note 9)		—			375
Other noncurrent assets		5			26
Total assets	$	7,807		$	8,027

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

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	February 28,			February 28,
	2019			2018
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	1,008		$	1,054
Accrued liabilities		382			877
Customer deposits		865			439
Contract liabilities		235			—
Line of credit		—			227
Current maturities of long-term debt		23			55
Deferred rent revenue		—			60
Note payable for acquisition (Note 13)		100			100
Notes payable to officers and directors, current (Note 4)		325			191
Total current liabilities		2,938			3,003
Long-term debt, less current maturities		—			23
Notes payable to officers and directors, less current maturities (Note 4)		189			398
Other noncurrent liabilities		19			17
Total liabilities		3,146			3,441
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; 5,878 outstanding at February 28, 2019 and 5,887 outstanding at February 28, 2018		7,293			7,293
Additional paid-in capital		274			256
Retained earnings		13,376			13,309
Treasury stock, 3,854 and 3,845 shares at February 28, 2019 and February 28, 2018, at cost		(16,282	)		(16,272	)
Total shareholders’ equity		4,661			4,586
Total liabilities and shareholders’ equity	$	7,807		$	8,027

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

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Video Display Corporation and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)

	February 28, 2019			February 28, 2018
Net sales	$	15,023		$	11,944
Cost of goods sold		10,983			11,354
Gross profit		4,040			590
Operating expenses
Selling and delivery		844			967
General and administrative		3,645			3,291
		4,489			4,258
Operating loss		(449	)		(3,668	)
Other income (expense)
Interest income (expense), net		(19	)		(20	)
Investment gain		42			17
Other income, net		493			733
Total other income, net		516			730
Income (loss) before income taxes		67			(2,938	)
Income tax expense		—			—
Net income (loss)	$	67		$	(2,938	)
Net income (loss) per share-basic	$	0.01		$	(0.50	)
Net income (loss) per share-diluted	$	0.01		$	(0.50	)
Average shares outstanding – basic		5,879			5,890
Average shares outstanding – diluted		6,079			5,890

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

22

Video Display Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(in thousands)

	Common Shares*			Share Amount		Additional Paid-in Capital		Retained Earnings			Treasury Stock		Total Shareholders’ Equity
Balance, February 28, 2017		5,891		$	7,293	$	186	$	16,247		$	(16,268)	$	7,458
Net loss		—			—		—		(2,938	)		—		(2,938	)
Repurchase of treasury stock		(4	)				2					(4)		(2	)
Share based compensation		—			—		68		—			—		68
Balance, February 28, 2018		5,887		$	7,293	$	256	$	13,309		$	(16,272)	$	4,586
Net income		—			—		—		67			—		67
Repurchase of treasury stock		(9	)		—		—					(10)		(10	)
Share based compensation		—			—		18		—			—		18
Balance, February 28, 2019		5,878		$	7,293	$	274	$	13,376		$	(16,282)	$	4,661

* Common Shares are shown net of Treasury Shares

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

23

Video Display Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)

	February 28, 2019			February 28, 2018
Operating Activities
Net income (loss)	$	67		$	(2,938	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		256			261
Change in provision for doubtful accounts		(3	)		(1	)
Change in provision for inventory reserve		(540	)		500
Deferred rental income		(60	)		(120	)
Non-cash charge for share based compensation		18			68
(Gain) loss on disposal of assets		(33	)		21
Realized/unrealized gain on investments		(42	)		(14	)
Changes in working capital items:
Accounts receivable		(1,079	)		2,109
Inventories		1,673			953
Prepaid expenses and other assets		(390	)		181
Accounts payable and accrued liabilities		(332	)		(335	)
Customer deposits		426			21
Other liabilities		2			46
Contract liabilities		235			—
Net cash provided by operating activities		198			752
Investing Activities
Capital expenditures		(152	)		(463	)
Investment in real estate partnership – related party (Note 9)		—			(500	)
Proceeds from sale of investment in real estate partnership — related party (Note 9)		166			125
Purchases of investments		(981	)		(2,301	)
Acquisition of business, net of cash acquired (Note 13)		—			(100	)
Proceeds from sale of equipment		71			—
Proceeds from sale of investments		1,309			2,509
Net cash provided by (used in) investing activities		413			(730	)
Financing Activities
Proceeds from related party loans		406			—
Repayments of long-term debt		(55	)		(54	)
Proceeds from line of credit		647			1,192
Repayments on line of credit		(874	)		(1,202	)
Purchase of treasury stock		(10	)		(4	)
Payments on marginal float		(106	)		(8	)
Repayments of notes payable to officers and directors		(290	)		—
Net cash used in financing activities		(282	)		(76	)
Net change in cash and cash equivalents		329			(54	)
Cash and cash equivalents, beginning of year		81			135
Cash and cash equivalents, end of year		410		$	81

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

See Note 11 for supplemental cash flow information.

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Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Nature of Business

Video Display Corporation and subsidiaries (the “Company”, ”our” or “we”) is a provider and manufacturer of video products, components, and systems for data display and presentation of electronic information media in various requirements and environments. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced display products and systems, from basic components to turnkey systems for government, military, aerospace, medical and commercial organizations. The Company serves the simulation, ruggedized displays, video wall design and installation, tempest products, tempest services, cathode ray tubes (CRTS) and keyboard manufacturing.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all intercompany accounts and transactions. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Fiscal Year

All references herein to “2019” and “2018” mean the fiscal years ended February 28, 2019 and February 28, 2018, respectively.

Basis of Accounting

“The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of authoritative accounting standards generally accepted in the United States of America (“U.S. GAAP”) recognized by the Financial Accounting Standards Board (“FASB”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The FASB amends the FASB ASC through Accounting Standards Updates (“ASUs”). ASCs and ASUs are referred to throughout these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Examples include provisions for returns, warranty reserves, bad debts, inventory reserves, valuations on deferred income tax assets, other intangible assets, accounting for percentage of completion contracts and the length of product life cycles and fixed asset lives. Actual results could vary from these estimates.

Banking and Liquidity

The accompanying 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 had sustained losses for each of the three prior years, but did record a profit for the current fiscal year and has seen an increase in both its working capital and liquid assets during this current year. The historical losses resulted from a combination of low revenues at all divisions without a commensurate reduction of expenses. This year, the Company did increase sales and report a lower operating loss compared to the previous year. The Company’s working capital and liquid asset position is presented as follows:

	February 28, 2019		February 28, 2018
Working capital	$	3,354	$	2,762
Liquid assets	$	410	$	261

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Management has implemented a plan to improve the liquidity of the Company. The Company has been implementing a plan to increase revenues at all the divisions, each structured to the particular division with an increase in revenues of over $3.0 million for fiscal year ended February 28, 2019. The Company is expanding 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 is also now involved in ruggedized displays, recently bringing on engineering familiar with these products. The Company implemented a plan to reduce expenses at the divisions, as well as at the corporate location during the fiscal year ending February 28, 2019 with the closing of two divisions and relocating the operations of those two divisions to other divisions within the Company with similar business activities. The Company is also in the process of moving the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The Company moved two of its plants in an effort to reduce expenses and increase efficiencies. The plant move at its subsidiary in Lexington, Kentucky, took longer than anticipated and negatively affected cash flow. The long term prospects for this subsidiary are promising and management is now seeing a turn around. The plant move at the Florida operations was successful as the Company merged two businesses and was able to keep production on schedule. 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 management’s plans to improve the operational effectiveness of the operations, to sell strategic assets as noted above, 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.

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.

Contract liabilities represent amounts collected prior to having completed performance on certain of our simulation or video wall system projects. No revenue was recognized in 2019 from performance obligations that were satisfied in prior periods. As of February 28, 2019, approximately $521k of revenue is expected to be recognized from remaining performance obligations for simulation system projects (including deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods). We expect to recognize revenue these remaining performance obligations over the next 24 months. We have elected not to provide disclosures regarding remaining performance obligations for contracts with a term of 1 year or less.

For the fiscal year ended February 28, 2019, revenue recognized by division of the Company is as follows (in thousands):

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Simulation and training (including video walls)	$	5,406
Cyber security		5,459
Data displays		2,533
Other computer products (keyboards)		1,436
Broadcast and control centers		189
Total revenue	$	15,023

Cash and Cash Equivalents and Investments

We consider all highly liquid investments purchased with original maturities of three months or less to be cash or cash equivalents. Investment securities that are held by the Company, are bought and held principally for the purpose of selling them in the near term, are classified as “trading” and principally consist of equity securities and mutual funds. These trading investments are carried at fair value with realized gains or losses and changes in fair value included in operations. The Company liquidated its investment accounts in in fiscal 2019.

Fair Value Measurements and Financial Instruments

The FASB’s fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis by the Company consisted of investment securities that were held for trading using Level 1 inputs. The Company liquidated all of its investment securities during the year ended February 28, 2019. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2018 (in thousands):

	February 28, 2018			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Stocks, options, and ETF (long)		291			291			—		—
Stocks, options, and ETF (short)		(5	)		(5	)
Total value of investments		286			286			—		—
Current liabilities:
Margin balance		(106	)		(106	)		—		—
Total value of liabilities		(106	)		(106	)		—		—
Total		180			180			—		—

The Company’s financial instruments which are not measured at fair value on the consolidated balance sheets include cash, accounts receivable, short-term liabilities, and debt. The estimated fair value of these financial instruments approximate cost due to the short period of time to maturity. Recorded amounts of long-term debt are considered to approximate fair value due to either rates that fluctuate with the market or are otherwise commensurate with the current market.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. The Company sells its products primarily to general contractors, government agencies, manufacturers, and consumers of video displays and CRTs. Management performs continuing credit evaluations of its customers’ financial condition and although the Company

27

generally does not require collateral, letters of credit may be required from its customers in certain circumstances, such as foreign sales. The allowance for doubtful accounts is determined by reviewing all accounts receivable and applying credit loss experience to the current receivable portfolio with consideration given to the current condition of the economy, assessment of the financial position of the creditors as well as payment history and overall trends in past due accounts compared to established thresholds. The Company monitors credit exposure and assesses the adequacy of the allowance for doubtful accounts on a regular basis. Historically, the Company’s allowance has been sufficient for any customer write-offs. Management believes accounts receivable are stated at amounts expected to be collected.

The following is a roll-forward of the allowance for doubtful accounts (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	19	$	—	$	(3	)	$	16
February 28, 2018	$	20	$	—	$	(1	)	$	19

Warranty Reserves

The Company records a liability for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available.

The warranty reserve is determined by recording a specific reserve for known warranty issues and a general reserve based on claims experience. The Company considers actual warranty claims compared to net sales, then adjusts its reserve liability accordingly. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Management believes that historically its procedures have been adequate and does not anticipate that its assumptions are reasonably likely to materially change in the future.

Inventories

Inventories consist primarily of CRTs, electron guns, monitors, digital projectors, video components and electronic parts. Inventories are stated at the lower of cost (first-in, first-out) or market.

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. The reserve for inventory obsolescence was approximately $0.9 million and $1.4 million at February 28, 2019 and February 28, 2018, respectively.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company provides for an obsolescence 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, although it believes the inventory will be sold in the future, will continue to reserve for any additional obsolescence.

Property, Plant and Equipment

Property, plant, and equipment are stated at cost. Depreciation is computed principally by the straight-line method for financial reporting purposes over the following estimated useful lives: Buildings – ten to twenty-five years; Machinery and Equipment – five to ten years. In addition, leasehold improvements are amortized over the shorter of the useful life of the asset or the related lease term. Depreciation expense totaled approximately $256 thousand and $261 thousand for the fiscal years ended 2019 and 2018, respectively. Substantial betterments to property, plant, and equipment are capitalized and routine repairs and maintenance are expensed as incurred. The Company is expected to invest an additional $0.1 million to upgrade the Cocoa, Florida location to accommodate the increase in business at the Florida facility. The Company does not anticipate any additional significant investments in capital assets for fiscal 2020.

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Management reviews and assesses long-lived assets, which includes property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, management estimates the future cash flows expected to result from the use of the asset. If the sum of the undiscounted expected cash flows is less than the carrying amount of the asset, an impairment loss is recognized based upon the estimated fair value of the asset.

Share-Based Compensation Plans

The Company accounts for employee share-based compensation under the fair value method and uses an option pricing model for estimating the fair value of stock options at the date of grant.

Share Repurchase Program

The Company has a share 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. During the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares at an average price of $1.12 per share, which were added to treasury shares on the consolidated balance sheet, and during the fiscal year ended February 28, 2018, the Company repurchased 3,600 shares at an average price of $1.24 per share. Under this program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 28, 2019.

Income Taxes

The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred income taxes as of February 28, 2019 and February 28, 2018 reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of February 28, 2019 and February 28, 2018 the Company did not have any material unrecognized tax benefits.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income. The Company did not have any interest and penalties accrued as of February 28, 2019 and February 28, 2018.

The Company’s tax years ended February 28, 2018, 2017 and 2016 remain open to examination by the Internal Revenue Service (“IRS”).

Earnings (Loss) per Share

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

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The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share for 2019 and 2018, (in thousands, except for per share data):

	Net Income (Loss)			Average Shares Outstanding		Net Income (Loss) Per Share
2019
Basic		67			5,879		0.01
Effect of dilution:
Options		—			200		—
Diluted earnings per share		67			6,079		0.01
2018
Basic	$	(2,938	)		5,890	$	(0.50	)
Effect of dilution:
Options		—			—		—
Diluted earnings per share	$	(2,938	)		5,890	$	(0.50	)

Stock options, debentures, and other liabilities convertible into 200,000 shares, of the Company’s common stock were anti-dilutive and, therefore, were excluded from the fiscal 2018 diluted earnings (loss) per share calculation.

Segment Reporting

An operating segment is defined as a component that engages in business activities, whose operating results are reviewed by the chief operating decision maker in order to make decisions about allocating resources, and for which discrete financial information is available. We operate and manage our business as one reportable segment. All of our divisions have similarities such as products and markets served; therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, these operations are reported as one segment within the consolidated financial statements.

Sales to foreign customers were 11% and 16% of consolidated net sales for fiscal 2019 and fiscal 2018, respectively.

New Accounting Pronouncements Adopted in Fiscal 2019

Effective March 1, 2018 we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and the additional related ASUs (codified in “ASC 606”), which replaces existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under GAAP. We elected the modified retrospective method upon adoption (applied to those contracts which were not completed as of March 1, 2018) with no impact to opening retained earnings or revenue reported. Results of reporting periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the previous revenue recognition standard (ASC 605).

New Accounting Pronouncements Not Yet Adopted as of February 28, 2019

In February 2016, the FASB issued ASU 2016-02, “Leases”. The final guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840, Leases. It is effective for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. We plan to adopt the new standard effective March 1, 2019 using the modified retrospective approach, which allows application of the standard at the adoption date rather than at the beginning of the earliest comparative period presented. We expect to elect the package of available practical expedients that will enable us to retain the lease classification and initial direct costs for any leases that existed prior to the adoption of the standard and will not reassess whether any contracts executed prior to the adoption of the standard are or contain leases. We expect that the adoption of this standard will result in the recognition of material right-of-use assets and corresponding liabilities in our consolidated balance sheets, but do not expect the adoption to have a material impact on our consolidated statements of operations or our consolidated statements of cash flows. The adoption of this standard will result in expanded lease related disclosures in the notes to our consolidated financial statements. While we are currently evaluating the final impact the adoption of this standard will have, we have identified existing lease contracts, have prepared and reviewed the necessary entries for the transition, and are updating our controls and procedures for leases under the new standard.

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Note 2. Inventories

Inventories consisted of the following (in thousands):

	February 28, 2019			February 28, 2018
Raw materials	$	2,973		$	4,657
Work-in-process		706			403
Finished goods		631			923
		4,310			5,983
Reserves for obsolescence		(859	)		(1,399	)
	$	3,451		$	4,584

The following is a roll forward of the Inventory Reserves (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	1,399	$	346	$	(886	)	$	859
February 28, 2018	$	1,899	$	673	$	(1,173	)	$	1,399

During fiscal 2019 and 2018, the Company wrote off or disposed of inventories of $0.9 and $1.1 million, respectively, of which all were previously reserved for through inclusion in the inventory reserve.

Note 3. Line of Credit and Long-Term Debt

The Company has a $0.5 million line of credit with the Brand Banking Company with no balance outstanding on the line at February 28, 2019. The line matures on August 15, 2019, is personally guaranteed by the Chief Executive Officer and has an interest rate of LIBOR plus 3.75%. The loan has no financial covenants.

The only other commercial, non-related party debt of the Company is $23 thousand outstanding as of February 28, 2019 that is owed on a building owned by the Company’s subsidiary, Teltron Technologies, Inc., in Birdsboro, PA. This amount owed will be paid in full in fiscal 2020.

The Company had no outstanding margin account borrowings as of February 28, 2019 as all security investments were liquidated in fiscal 2019. The outstanding margin account borrowings as of February 28, 2018 was $0.1 million. The margin account borrowings were used to purchase marketable equity securities and were netted against the investments in the consolidated balance sheet to show net trading investments. The gross investments as of February 28, 2018 were $0.3 million leaving net investments of $0.2 million after the margin account borrowings of $0.1 million. The margin interest rate was 2%.

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

	February 28, 2019			February 28, 2018
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 of $5 thousand payable through July 2019; collateralized by land and building of Teltron Technologies, Inc.	$	23		$	78
		23			78
Less current maturities		(23	)		(55	)
	$	—		$	23

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Note 4. Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

The Company borrowed funds from the Chief Executive officer during the fiscal 2019. The Company repaid $290 thousand of the funds borrowed during 2019, leaving a balance of $116 thousand at the year ended February 28, 2019. This is a non-interest bearing loan as repayment is expected in the short-term.

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 at February 28, 2019 was $398 thousand with $209 thousand classified as a current as of February 28, 2019. Under the terms of the arrangement, $209 and $189 thousand are expected to be received in fiscal 2020 and 2021, respectively.

Note 5. Accrued Expenses and Warranty Obligations

The following provides a reconciliation of changes in the Company’s warranty reserve for fiscal years 2019 and 2018. The Company provides no other guarantees.

	2019			2018
Balance at beginning of year		127		$	127
Reduction in provision based on current year sales activity, net		(77	)		54
Warranty costs incurred		(13	)		(54	)
Balance at end of year		37		$	127

Accrued liabilities consisted of the following (in thousands):

	February 28, 2019		February 28, 2018
Accrued compensation and benefits	$	296	$	342
Accrued warranty		37		127
Accrued other		49		408
	$	382	$	877

Note 6. Stock Options

Upon recommendation of the Board of Directors of the Company, on August 25, 2006, the shareholders of the Company approved the Video Display Corporation 2006 Stock Incentive Plan (“Plan”), whereby options to purchase up to 500,000 shares of the Company’s common stock may be granted and up to 100,000 restricted common stock shares may be awarded. Options may not be granted at a price less than the fair market value, determined on the day the options are granted. Options granted to a participant who is the owner of ten percent or more of the common stock of the Company may not be granted at a price less than 110% of the fair market value, determined on the day the options are granted. The exercise price of each option granted is fixed and may not be re-priced. The life of each option granted is determined by the plan administrator, but may not exceed the lesser of seven years from the date the participant has the vested right to exercise the option, or nine years from the date of the grant. The life of an option granted to a participant who is the owner of ten percent or more of the common stock of the Company may not exceed five years from the date of grant. All full-time or part-time employees, and Directors of the Company, are eligible for participation in the Plan. In addition, any consultant or advisor who renders bona fide services to the Company, other than in connection with the offer or sale of securities in a capital-raising transaction, is eligible for participation in the Plan. The plan administrator is appointed by the Board of Directors of the Company. The Plan may be terminated by action of the Board of Directors, but in any event will terminate on the tenth anniversary of its effective date.

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Information regarding the stock option plans is as follows:

	Number of Options (in thousands)			Average Exercise Price Per Share
Outstanding at February 28, 2017		69		$	3.46
Granted		200			0.82
Forfeited or expired		(69	)		3.46
Outstanding at February 28, 2018		200		$	0.82
Granted		—			—
Forfeited or expired		—			—
Outstanding at February 28, 2019		200		$	0.82
Options exercisable
February 28, 2018		60		$	0.82
February 28, 2019		107		$	0.82

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number Outstanding at February 28, 2019 (in thousands)	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price	Number Exercisable at February 28, 2019 (in thousands)	Weighted Average Exercise Price
$0.80  –  $1.00	200	7.0	$0.82	107	$0.82

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 be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock. The Company calculates the historic volatility based on the weekly stock closing price, adjusted for dividends and stock splits. The fair value of the stock options is based on the stock price at the time the option is granted, the annualized volatility of the stock and the discount rate at the grant date.

The Company granted 200 thousand stock options during fiscal 2018 with no options granted in fiscal 2019.

The fair value assumptions used for the stock options granted in fiscal 2018 were as follows:

Risk-free interest rate		1.50	%
Expected dividend yield		—
Expected volatility		63	%
Expected life in years		7
Service period in years		2
Weighted average calculated value of united granted	$	0.58

For the fiscal years ended February 28, 2019 and February 28, 2018, the Company recognized $18 and $68 thousand, respectively, of share-based compensation in general and administrative expense in the statements of operations. As of February 28, 2019, total unrecognized compensation costs related to stock options was $7 thousand. The amount of unrecognized share-based compensation cost will be recognized in fiscal 2020.

33

Note 7. Income Taxes

Due to the historical net losses reported by the Company and the conclusion that is is more likely than not that the company will not be able to utilize such net operating losses, there is no provision or benefit recorded related to income taxes in the consolidated statements of operations.

The rate reconciliation related to income taxes differs from the amount computed by applying the federal statutory rate of 21% for the fiscal year ended February 28, 2019 and 24% for the fiscal year ended February 28, 2018 is as follows (in thousands):

	Fiscal Year Ended
	February 28, 2019			February 28, 2018
Statutory U.S. federal income tax rate	$	17		$	(780	)
State income taxes, net of federal benefit		22			(31	)
Tax rate adjustment – 24% to 21%		—			2,243
Valuation allowance		(57	)		(1,593	)
Other		18			161
Taxes at effective income tax rate	$	—		$	—

The sources of the temporary differences and carry forwards, and their effect on the net deferred tax assets consisted of the following (in thousands):

	February 28, 2019			February 28, 2018
Current deferred tax assets (liabilities):
Uniform capitalization costs	$	85		$	88
Inventory reserves		211			336
Accrued liabilities		44			70
Allowance for doubtful accounts		4			5
Other		(10	)		(1	)
Valuation allowance		(334	)		(498	)
Net current deferred tax assets		—			—
Non-current deferred tax assets:
Amortization of intangibles		2			19
Deferred rent		—			14
Non-deductible losses		1,360			1,373
State net operating loss carry-forward		717			732
Federal net operating loss carry-forward		2,883			2,733
Federal tax credit carry forward		318			318
Foreign tax credit carry-forward		99			99
Basis difference of property, plant and equipment		43			33
Valuation allowance		(5,422	)		(5,321	)
Net non-current deferred tax assets		—			—
Net deferred tax assets	$	—		$	—

Deferred tax assets have been reduced by a valuation allowance because, in the opinion of management, it is more likely than not that the Company’s deferred tax assets will not be realized. The Company has determined that a 100% valuation allowance is needed due to historical cumulative taxable net operating losses and the limited taxable income related to the carry back periods. The Company has available federal and state net operating loss carryforwards of $13.7 million and $13.0 million, in the fiscal years ending February 28, 2019 and 2018, respectively. The net operating loss carryforwards expire at various dates through fiscal 2039, if not used.

Note 8. Benefit Plan

The Company maintains defined contribution plans that are available to all employees. The Company did not make a contribution in the fiscal year ended February 28, 2019 or February 28, 2018 to the Company’s 401(k) plan.

34

Note 9. Commitments and Contingencies

Operating Leases

The Company leases various manufacturing facilities and transportation equipment under leases classified as operating leases, expiring at various dates through 2025. These leases provide that the Company pay taxes, insurance, and other expenses on the leased property and equipment. Rent expense for all leases was approximately $0.6 million and $1.1 million in fiscal 2019 and 2018, respectively.

Future minimum rental payments due under these leases are as follows (in thousands):

Fiscal Year	Amount
2020	$	577
2021		572
2022		572
2023		273
2024		190
2025		189
	$	2,373

Related Party Leases

Included above are leases for manufacturing and warehouse facilities leased from the Company’s chief executive officer and Ordway Properties, LLC (an entity in which the chief executive officer has an ownership interest in) under operating leases expiring at various dates through 2025. Rent expense under these leases totaled approximately $0.6 million in fiscal 2019 and $0.5 million in fiscal 2018.    

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 May 31, 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. The building is the facility for the Company’s Lexel Imaging subsidiary, which had previously signed a five (5) year lease agreement with Honeyhill Properties, LLC on June 15, 2017.

Future minimum rental payments due under leases with related parties are as follows (in thousands):

Fiscal Year	Amount
2020	$	390
2021		390
2022		390
2023		256
2024		190
2025		189
	$	1,805

Legal Proceedings

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.

On May 19, 2017, Lexel Imaging’s Chapter 11 Bankruptcy case was dismissed upon approval of a settlement agreement between Lexel Imaging (Lexel) and its landlord, Alidade Bull Lea, LLC (Alidade). The settlement agreement required Lexel to surrender possession of the rental property on or before September 30, 2017 and remit to Alidade all past due rent of approximately $232 thousand. Lexel was also required to make payments totaling $100 thousand into an escrow account by July 28, 2017. These funds were held by Alidade’s counsel until full and timely compliance with the settlement agreement was met, at which time the funds were returned to Lexel. The Company complied with all of the stipulations and successfully vacated the building on September 15, 2017.

35

Note 10. Concentrations of Risk and Major Customers

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, accounts receivable and historically investments prior to liquidation. At times, such cash in banks are in excess of the FDIC insurance limit.

The Company sells to a variety of domestic and international customers on an open-unsecured account basis, in certain cases requiring letters of credit. These customers principally operate in the medical, military, and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs, which comprised approximately 53% and 50% of consolidated net sales in fiscal 2019 and 2018, respectively. Sales to foreign customers were 11% and 16% of consolidated net sales in fiscal 2019 and 2018, respectively. The Company had three customers who each comprised more than 10% of the Company’s sales in fiscal year 2019 (aggregated 45%). These accounts are in good standing with the Company.

The Company attempts to minimize credit risk by reviewing all customers’ credit history before extending credit, by monitoring customers’ credit exposure on a daily basis and requiring letters of credit for certain sales. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Note 11. Supplemental Cash Flow Information

	Fiscal Year Ended (in thousands)
	February 28, 2019			February 28, 2018
Cash paid for:
Interest	$	20		$	20
Income taxes, net of refunds	$	—		$	24
Non-cash activity:
Note receivable paid directly to officer	$	191		$	175
Note payable to officer	$	(191	)	$	(175	)
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note 9)	$	209			—
Imputed interest expense	$	45		$	62
Imputed interest income	$	(45	)	$	(62	)
Capital additions transferred from inventory	$	—		$	113

36

Note 12. Selected Quarterly Financial Data (unaudited)

The following table sets forth selected quarterly consolidated financial data for the fiscal years ended February 28, 2019 and February 28, 2018, respectively. The summation of quarterly net income (loss) per share may not agree with annual net income (loss) per share due to rounding:

	2019
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	4,021		$	3,321		$	4,170		$	3,511
Gross profit		996			879			1,096			1,069
Net income (loss)		54			(6	)		71			(52	)
Basic net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
Diluted net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
	2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	3,897		$	3,161		$	1,666		$	3,220
Gross profit (loss)		597			478			(144	)		(341	)
Net loss		(266	)		(221	)		(1,203	)		(1,248	)
Basic net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)
Diluted net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)

Note 13. – Acquisition of Unicomp

On October 23, 2017, the Company acquired Unicomp, Inc., a keyboard manufacturer for a purchase price of $200 thousand. The fair value related to the purchase price consideration was allocated to inventory. The Company paid $100 thousand in cash and a note with the seller for $100 thousand. The $100 thousand note is non-interest bearing and is payable at the completion of a product development plan by the previous owner which is expected in fiscal 2020. The Company acquired Unicomp as an opportunity to develop, market and sell Tempest keyboards for its cyber security division.

37

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item9A (T). Controls and Procedures.

Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (February 28, 2018). Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow final decisions regarding required disclosures. Based on their evaluation of the Company’s disclosure controls and procedures as of February 28, 2019, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective.

The required certifications of our Chief Executive Officer and our Chief Financial Officer are included as exhibits to this Annual Report on Form 10-K. The disclosures set forth in this Item 9A contain information concerning the evaluation of our disclosure controls and procedures, internal control over financial reporting and changes to internal control referred to in those certifications. Those certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Controls

There were no 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 fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

All internal controls, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of February 28, 2019. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 Framework) entitled “Internal Control- Integrated Framework.” Based on such assessment, our management concluded that as of February 28, 2019 our internal control over financial reporting was effective.

38

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Limitations on the effectiveness of controls.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that internal control over financial reporting and our disclosure controls and procedures will prevent all errors and potential fraud. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Video Display Corporation have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information.

None.

39

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information contained in Video Display Corporation’s Proxy Statement to be filed within 120 days of the Company’s 2019 fiscal year end (the “2019 Proxy Statement”), with respect to directors and executive officers of the Company under the headings “Election of Directors” and “Executive Officers”, is incorporated herein by reference in response to this item; provided, however, that the information contained in the 2019 Proxy Statement under the heading “Compensation and Stock Option Committee Report” or under the heading “Performance Graph” shall not be incorporated herein by reference.

Item 11. Executive Compensation.

The information contained in the 2019 Proxy Statement under the heading, “Executive Compensation and Other Benefits”, with respect to executive compensation, is incorporated herein by reference in response to this item.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information contained in the 2019 Proxy Statement under the headings “Common Stock Ownership” and “Executive Compensation and Other Benefits”, is incorporated herein by reference in response to this item.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information contained in the 2019 Proxy Statement under the heading, “Transactions with Affiliates”, is incorporated herein by reference in response to this item.

Item 14. Principal Accounting Fees and Services.

The information contained in the 2019 Proxy Statement under the heading, “Audit Fees and All Other Fees” is incorporated herein by reference in response to this item.

40

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this Report:

Financial Statements:

The following consolidated financial statements of the Company and its consolidated subsidiaries and the Reports of the Independent Registered Public Accounting Firms are included in Part II, Item 8.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of February 28, 2019 and February 28, 2018.

Consolidated Statements of Operations—Fiscal Years Ended February 28, 2019 and February 28, 2018.

Consolidated Statements of Shareholders’ Equity—Fiscal Years Ended February 28, 2019 and February 28, 2018.

Consolidated Statements of Cash Flows—Fiscal Years Ended February 28, 2019 and February 28, 2018.

Notes to Consolidated Financial Statements

(b) 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  20, 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)
21	Subsidiary Companies
23.1	Consent of Hancock Askew & Co., LLP
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

41

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 29, 2019	VIDEO DISPLAY CORPORATION
	By:	/s/ Ronald D. Ordway
		Ronald D. Ordway
		Chairman of the Board and Chief Executive Officer

POWER OF ATTORNEY

Know all men by these presents, that each person whose signature appears below constitutes and appoints Ronald D. Ordway as attorney-in-fact, with power of substitution, for him in any and all capacity, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature -Name	Capacity	Date
/s/ Ronald D. Ordway	Chief Executive Officer,	May 29, 2019
Ronald D. Ordway	Treasurer and Director
	(Principal Executive Officer)
/s/ Gregory L. Osborn	Chief Financial Officer and Director	May 29, 2019
Gregory L. Osborn	(Principal Financial Officer)

EX-21

Exhibit 21

Video Display Corporation

Subsidiary Companies

AYON CyberSecurity, Inc.

5155 King Street

Cocoa, Florida 32926

Teltron Technologies, Inc.

1868 Tucker Industrial Road

Tucker, Georgia 30084

Lexel Imaging Systems

510 Henry Clay Blvd.

Lexington, Kentucky 40505

Unicomp GA, LLC

510 Henry Clay Blvd.

Lexington, Kentucky 40505

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference of our report dated May 29, 2019, relating to our audit of the Video Display Corporation and subsidiaries’ (the “Company”) consolidated financial statements as of and for the year ended February 28, 2019, which appears in this Annual Report on Form 10-K in Registration Statements (No. 333-15337 and No. 333-138076) on Form S-8.

/s/ Hancock Askew & Co., LLP

Norcross, Georgia

May 29, 2019

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 annual report on Form 10-K of Video Display Corporation;

2. Based on my knowledge, this annual 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 annual report;

4. The registrant’s other certifying officers 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: May 29, 2019	/s/ Ronald D. Ordway
	Ronald D. Ordway
	Chief Executive Officer

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 annual report on Form 10-K of Video Display Corporation;

2. Based on my knowledge, this annual 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 annual report;

4. The registrant’s other certifying officers 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

c) 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: May 29, 2019	/s/ Gregory L. Osborn
	Gregory L. Osborn
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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 Annual Report on Form 10-K for the fiscal year ended February 28, 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 29th day of May, 2019	/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 Annual Report on Form 10-K for the fiscal year ended February 28, 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 29th day of May, 2019	/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 32.1 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.

XML

Document and Entity Information - USD ($)	12 Months Ended
	Feb. 28, 2019	May 01, 2019	Aug. 31, 2018
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Feb. 28, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Trading Symbol	VIDE
Entity Registrant Name	VIDEO DISPLAY CORP
Entity Central Index Key	0000758743
Current Fiscal Year End Date	--02-28
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Non-accelerated Filer
Entity Public Float			$ 353,421
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		5,878,290
Entity Shell Company	false
Entity Small Business	true

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018
Current assets
Cash and cash equivalents	$ 410	$ 81
Trading investments, at fair value		180
Accounts receivable, less allowance for bad debts of $16 and $19	1,746	664
Inventories, net	3,451	4,584
Prepaid expenses and other current assets	476	65
Total current assets	6,292	5,765
Property, plant and equipment:
Land	154	154
Buildings	2,760	2,799
Construction in progress	73
Machinery and equipment	5,732	5,753
Total property, plant and equipment	8,719	8,706
Accumulated depreciation	(7,398)	(7,243)
Net property, plant and equipment	1,321	1,463
Notes receivable due from officers and directors, noncurrent (Note 4)	189	398
Investment in real estate partnership – related party (Note 9)		375
Other noncurrent assets	5	26
Total assets	7,807	8,027
Current liabilities
Accounts payable	1,008	1,054
Accrued liabilities	382	877
Customer deposits	865	439
Contract liabilities	235
Line of credit		227
Current maturities of long-term debt	23	55
Deferred rent revenue		60
Note payable for acquisition (Note 13)	100	100
Total current liabilities	2,938	3,003
Long-term debt, less current maturities	0	23
Notes payable to officers and directors, less current maturities (Note 4)	189	398
Other noncurrent liabilities	19	17
Total liabilities	3,146	3,441
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; 5,878 outstanding at February 28, 2019 and 5,887 outstanding at February 28, 2018	7,293	7,293
Additional paid-in capital	274	256
Retained earnings	13,376	13,309
Treasury stock, 3,854 and 3,845 shares at February 28, 2019 and February 28, 2018, at cost	(16,282)	(16,272)
Total shareholders' equity	4,661	4,586
Total liabilities and shareholders' equity	7,807	8,027
Officers and Directors
Current assets
Notes receivable due from officers and directors, current (Note 4)	209	191
Current liabilities
Notes payable	$ 325	$ 191

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018
Accounts receivable, allowance for doubtful accounts	$ 16	$ 19
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	5,887,000
Treasury stock, shares	3,854,000	3,845,000

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Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Net sales	$ 15,023	$ 11,944
Cost of goods sold	10,983	11,354
Gross profit	4,040	590
Operating expenses
Selling and delivery	844	967
General and administrative	3,645	3,291
Operating Expenses, Total	4,489	4,258
Operating loss	(449)	(3,668)
Other income (expense)
Interest income (expense), net	(19)	(20)
Investment gain	42	17
Other income, net	493	733
Total other income, net	516	730
Income (loss) before income taxes	67	(2,938)
Income tax expense
Net income (loss)	$ 67	$ (2,938)
Net income (loss) per share-basic	$ 0.01	$ (0.50)
Net income (loss) per share-diluted	$ 0.01	$ (0.50)
Average shares outstanding – basic	5,879	5,890
Average shares outstanding – diluted	6,079	5,890

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Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands		Total	Common Shares		Additional Paid-in Capital	Retained Earnings	Treasury Stock
Balance (in shares) at Feb. 28, 2017	[1]		5,891,000
Balance at Feb. 28, 2017		$ 7,458	$ 7,293		$ 186	$ 16,247	$ (16,268)
Net income (loss)		$ (2,938)				(2,938)
Repurchase of treasury stock, shares		(3,600)	(4)	[1]
Repurchase of treasury stock		$ (2)			2		(4)
Share based compensation		68			68
Balance (in shares) at Feb. 28, 2018	[1]		5,887,000
Balance at Feb. 28, 2018		4,586	$ 7,293		256	13,309	(16,272)
Net income (loss)		$ 67				67
Repurchase of treasury stock, shares		(8,858)	(9)	[1]
Repurchase of treasury stock		$ (10)					(10)
Share based compensation		18			18
Balance (in shares) at Feb. 28, 2019	[1]		5,878,000
Balance at Feb. 28, 2019		$ 4,661	$ 7,293		$ 274	$ 13,376	$ (16,282)

[1] Common Shares are shown net of Treasury Shares

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Operating Activities
Net income (loss)	$ 67	$ (2,938)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	256	261
Change in provision for doubtful accounts	(3)	(1)
Change in provision for inventory reserve	(540)	500
Deferred rental income	(60)	(120)
Non-cash charge for share based compensation	18	68
(Gain) loss on disposal of assets	(33)	21
Realized/unrealized gain on investments	(42)	(14)
Changes in working capital items:
Accounts receivable	(1,079)	2,109
Inventories	1,673	953
Prepaid expenses and other assets	(390)	181
Accounts payable and accrued liabilities	(332)	(335)
Customer deposits	426	21
Other liabilities	2	46
Contract liabilities	235
Net cash provided by operating activities	198	752
Investing Activities
Capital expenditures	(152)	(463)
Investment in real estate partnership – related party (Note 9)		(500)
Proceeds from sale of investment in real estate partnership — related party (Note 9)	166	125
Purchases of investments	(981)	(2,301)
Acquisition of business, net of cash acquired (Note 13)		(100)
Proceeds from sale of equipment	71
Proceeds from sale of investments	1,309	2,509
Net cash provided by (used in) investing activities	413	(730)
Financing Activities
Proceeds from related party loans	406
Repayments of long-term debt	(55)	(54)
Proceeds from line of credit	647	1,192
Repayments on line of credit	(874)	(1,202)
Purchase of treasury stock	(10)	(4)
Payments on marginal float	(106)	(8)
Repayments of notes payable to officers and directors	(290)
Net cash used in financing activities	(282)	(76)
Net change in cash and cash equivalents	329	(54)
Cash and cash equivalents, beginning of year	81	135
Cash and cash equivalents, end of year	$ 410	$ 81

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Summary of Significant Accounting Policies

12 Months Ended

Feb. 28, 2019

Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Nature of Business

Video Display Corporation and subsidiaries (the “Company”, ”our” or “we”) is a provider and manufacturer of video products, components, and systems for data display and presentation of electronic information media in various requirements and environments. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced display products and systems, from basic components to turnkey systems for government, military, aerospace, medical and commercial organizations. The Company serves the simulation, ruggedized displays, video wall design and installation, tempest products, tempest services, cathode ray tubes (CRTS) and keyboard manufacturing.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all intercompany accounts and transactions. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Fiscal Year

All references herein to “2019” and “2018” mean the fiscal years ended February 28, 2019 and February 28, 2018, respectively.

Basis of Accounting

“The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of authoritative accounting standards generally accepted in the United States of America (“U.S. GAAP”) recognized by the Financial Accounting Standards Board (“FASB”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The FASB amends the FASB ASC through Accounting Standards Updates (“ASUs”). ASCs and ASUs are referred to throughout these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Examples include provisions for returns, warranty reserves, bad debts, inventory reserves, valuations on deferred income tax assets, other intangible assets, accounting for percentage of completion contracts and the length of product life cycles and fixed asset lives. Actual results could vary from these estimates.

Banking and Liquidity

The accompanying 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 had sustained losses for each of the three prior years, but did record a profit for the current fiscal year and has seen an increase in both its working capital and liquid assets during this current year. The historical losses resulted from a combination of low revenues at all divisions without a commensurate reduction of expenses. This year, the Company did increase sales and report a lower operating loss compared to the previous year. The Company’s working capital and liquid asset position is presented as follows:

	February 28, 2019		February 28, 2018
Working capital	$	3,354	$	2,762
Liquid assets	$	410	$	261

Management has implemented a plan to improve the liquidity of the Company. The Company has been implementing a plan to increase revenues at all the divisions, each structured to the particular division with an increase in revenues of over $3.0 million for fiscal year ended February 28, 2019. The Company is expanding 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 is also now involved in ruggedized displays, recently bringing on engineering familiar with these products. The Company implemented a plan to reduce expenses at the divisions, as well as at the corporate location during the fiscal year ending February 28, 2019 with the closing of two divisions and relocating the operations of those two divisions to other divisions within the Company with similar business activities. The Company is also in the process of moving the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The Company moved two of its plants in an effort to reduce expenses and increase efficiencies. The plant move at its subsidiary in Lexington, Kentucky, took longer than anticipated and negatively affected cash flow. The long term prospects for this subsidiary are promising and management is now seeing a turn around. The plant move at the Florida operations was successful as the Company merged two businesses and was able to keep production on schedule. 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 management’s plans to improve the operational effectiveness of the operations, to sell strategic assets as noted above, 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.

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.

Contract liabilities represent amounts collected prior to having completed performance on certain of our simulation or video wall system projects. No revenue was recognized in 2019 from performance obligations that were satisfied in prior periods. As of February 28, 2019, approximately $521k of revenue is expected to be recognized from remaining performance obligations for simulation system projects (including deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods). We expect to recognize revenue these remaining performance obligations over the next 24 months. We have elected not to provide disclosures regarding remaining performance obligations for contracts with a term of 1 year or less.

For the fiscal year ended February 28, 2019, revenue recognized by division of the Company is as follows (in thousands):

Simulation and training (including video walls)	$	5,406
Cyber security		5,459
Data displays		2,533
Other computer products (keyboards)		1,436
Broadcast and control centers		189
Total revenue	$	15,023

Cash and Cash Equivalents and Investments

We consider all highly liquid investments purchased with original maturities of three months or less to be cash or cash equivalents. Investment securities that are held by the Company, are bought and held principally for the purpose of selling them in the near term, are classified as “trading” and principally consist of equity securities and mutual funds. These trading investments are carried at fair value with realized gains or losses and changes in fair value included in operations. The Company liquidated its investment accounts in in fiscal 2019.

Fair Value Measurements and Financial Instruments

The FASB’s fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis by the Company consisted of investment securities that were held for trading using Level 1 inputs. The Company liquidated all of its investment securities during the year ended February 28, 2019. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2018 (in thousands):

	February 28, 2018			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Stocks, options, and ETF (long)		291			291			—		—
Stocks, options, and ETF (short)		(5	)		(5	)
Total value of investments		286			286			—		—
Current liabilities:
Margin balance		(106	)		(106	)		—		—
Total value of liabilities		(106	)		(106	)		—		—
Total		180			180			—		—

The Company’s financial instruments which are not measured at fair value on the consolidated balance sheets include cash, accounts receivable, short-term liabilities, and debt. The estimated fair value of these financial instruments approximate cost due to the short period of time to maturity. Recorded amounts of long-term debt are considered to approximate fair value due to either rates that fluctuate with the market or are otherwise commensurate with the current market.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. The Company sells its products primarily to general contractors, government agencies, manufacturers, and consumers of video displays and CRTs. Management performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, letters of credit may be required from its customers in certain circumstances, such as foreign sales. The allowance for doubtful accounts is determined by reviewing all accounts receivable and applying credit loss experience to the current receivable portfolio with consideration given to the current condition of the economy, assessment of the financial position of the creditors as well as payment history and overall trends in past due accounts compared to established thresholds. The Company monitors credit exposure and assesses the adequacy of the allowance for doubtful accounts on a regular basis. Historically, the Company’s allowance has been sufficient for any customer write-offs. Management believes accounts receivable are stated at amounts expected to be collected.

The following is a roll-forward of the allowance for doubtful accounts (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	19	$	—	$	(3	)	$	16
February 28, 2018	$	20	$	—	$	(1	)	$	19

Warranty Reserves

The Company records a liability for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available.

The warranty reserve is determined by recording a specific reserve for known warranty issues and a general reserve based on claims experience. The Company considers actual warranty claims compared to net sales, then adjusts its reserve liability accordingly. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Management believes that historically its procedures have been adequate and does not anticipate that its assumptions are reasonably likely to materially change in the future.

Inventories

Inventories consist primarily of CRTs, electron guns, monitors, digital projectors, video components and electronic parts. Inventories are stated at the lower of cost (first-in, first-out) or market.

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. The reserve for inventory obsolescence was approximately $0.9 million and $1.4 million at February 28, 2019 and February 28, 2018, respectively.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company provides for an obsolescence 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, although it believes the inventory will be sold in the future, will continue to reserve for any additional obsolescence.

Property, Plant and Equipment

Property, plant, and equipment are stated at cost. Depreciation is computed principally by the straight-line method for financial reporting purposes over the following estimated useful lives: Buildings – ten to twenty-five years; Machinery and Equipment – five to ten years. In addition, leasehold improvements are amortized over the shorter of the useful life of the asset or the related lease term. Depreciation expense totaled approximately $256 thousand and $261 thousand for the fiscal years ended 2019 and 2018, respectively. Substantial betterments to property, plant, and equipment are capitalized and routine repairs and maintenance are expensed as incurred. The Company is expected to invest an additional $0.1 million to upgrade the Cocoa, Florida location to accommodate the increase in business at the Florida facility. The Company does not anticipate any additional significant investments in capital assets for fiscal 2020.

Management reviews and assesses long-lived assets, which includes property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, management estimates the future cash flows expected to result from the use of the asset. If the sum of the undiscounted expected cash flows is less than the carrying amount of the asset, an impairment loss is recognized based upon the estimated fair value of the asset.

Share-Based Compensation Plans

The Company accounts for employee share-based compensation under the fair value method and uses an option pricing model for estimating the fair value of stock options at the date of grant.

Share Repurchase Program

The Company has a share 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. During the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares at an average price of $1.12 per share, which were added to treasury shares on the consolidated balance sheet, and during the fiscal year ended February 28, 2018, the Company repurchased 3,600 shares at an average price of $1.24 per share. Under this program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 28, 2019.

Income Taxes

The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred income taxes as of February 28, 2019 and February 28, 2018 reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of February 28, 2019 and February 28, 2018 the Company did not have any material unrecognized tax benefits.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income. The Company did not have any interest and penalties accrued as of February 28, 2019 and February 28, 2018.

The Company’s tax years ended February 28, 2018, 2017 and 2016 remain open to examination by the Internal Revenue Service (“IRS”).

Earnings (Loss) per Share

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

The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share for 2019 and 2018, (in thousands, except for per share data):

	Net Income (Loss)			Average Shares Outstanding		Net Income (Loss) Per Share
2019
Basic		67			5,879		0.01
Effect of dilution:
Options		—			200		—
Diluted earnings per share		67			6,079		0.01
2018
Basic	$	(2,938	)		5,890	$	(0.50	)
Effect of dilution:
Options		—			—		—
Diluted earnings per share	$	(2,938	)		5,890	$	(0.50	)

Stock options, debentures, and other liabilities convertible into 200,000 shares, of the Company’s common stock were anti-dilutive and, therefore, were excluded from the fiscal 2018 diluted earnings (loss) per share calculation.

Segment Reporting

An operating segment is defined as a component that engages in business activities, whose operating results are reviewed by the chief operating decision maker in order to make decisions about allocating resources, and for which discrete financial information is available. We operate and manage our business as one reportable segment. All of our divisions have similarities such as products and markets served; therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, these operations are reported as one segment within the consolidated financial statements.

Sales to foreign customers were 11% and 16% of consolidated net sales for fiscal 2019 and fiscal 2018, respectively.

New Accounting Pronouncements Adopted in Fiscal 2019

Effective March 1, 2018 we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and the additional related ASUs (codified in “ASC 606”), which replaces existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under GAAP. We elected the modified retrospective method upon adoption (applied to those contracts which were not completed as of March 1, 2018) with no impact to opening retained earnings or revenue reported. Results of reporting periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the previous revenue recognition standard (ASC 605).

New Accounting Pronouncements Not Yet Adopted as of February 28, 2019

In February 2016, the FASB issued ASU 2016-02, “Leases”. The final guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840, Leases. It is effective for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. We plan to adopt the new standard effective March 1, 2019 using the modified retrospective approach, which allows application of the standard at the adoption date rather than at the beginning of the earliest comparative period presented. We expect to elect the package of available practical expedients that will enable us to retain the lease classification and initial direct costs for any leases that existed prior to the adoption of the standard and will not reassess whether any contracts executed prior to the adoption of the standard are or contain leases. We expect that the adoption of this standard will result in the recognition of material right-of-use assets and corresponding liabilities in our consolidated balance sheets, but do not expect the adoption to have a material impact on our consolidated statements of operations or our consolidated statements of cash flows. The adoption of this standard will result in expanded lease related disclosures in the notes to our consolidated financial statements. While we are currently evaluating the final impact the adoption of this standard will have, we have identified existing lease contracts, have prepared and reviewed the necessary entries for the transition, and are updating our controls and procedures for leases under the new standard.

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Inventories

12 Months Ended

Feb. 28, 2019

Inventories

Note 2. Inventories

Inventories consisted of the following (in thousands):

	February 28, 2019			February 28, 2018
Raw materials	$	2,973		$	4,657
Work-in-process		706			403
Finished goods		631			923
		4,310			5,983
Reserves for obsolescence		(859	)		(1,399	)
	$	3,451		$	4,584

The following is a roll forward of the Inventory Reserves (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	1,399	$	346	$	(886	)	$	859
February 28, 2018	$	1,899	$	673	$	(1,173	)	$	1,399

During fiscal 2019 and 2018, the Company wrote off or disposed of inventories of $0.9 and $1.1 million, respectively, of which all were previously reserved for through inclusion in the inventory reserve.

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Line of Credit and Long-Term Debt

12 Months Ended

Feb. 28, 2019

Line of Credit and Long-Term Debt

Note 3. Line of Credit and Long-Term Debt

The Company has a $0.5 million line of credit with the Brand Banking Company with no balance outstanding on the line at February 28, 2019. The line matures on August 15, 2019, is personally guaranteed by the Chief Executive Officer and has an interest rate of LIBOR plus 3.75%. The loan has no financial covenants.

The only other commercial, non-related party debt of the Company is $23 thousand outstanding as of February 28, 2019 that is owed on a building owned by the Company’s subsidiary, Teltron Technologies, Inc., in Birdsboro, PA. This amount owed will be paid in full in fiscal 2020.

The Company had no outstanding margin account borrowings as of February 28, 2019 as all security investments were liquidated in fiscal 2019. The outstanding margin account borrowings as of February 28, 2018 was $0.1 million. The margin account borrowings were used to purchase marketable equity securities and were netted against the investments in the consolidated balance sheet to show net trading investments. The gross investments as of February 28, 2018 were $0.3 million leaving net investments of $0.2 million after the margin account borrowings of $0.1 million. The margin interest rate was 2%.

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

	February 28, 2019			February 28, 2018
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 of $5 thousand payable through July 2019; collateralized by land and building of Teltron Technologies, Inc.	$	23		$	78
		23			78
Less current maturities		(23	)		(55	)
	$	—		$	23

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Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

12 Months Ended

Feb. 28, 2019

Related Party Transactions [Abstract]

Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

Note 4. Notes Receivable and Payable to Officers and Directors (Related Party Transactions)

The Company borrowed funds from the Chief Executive officer during the fiscal 2019. The Company repaid $290 thousand of the funds borrowed during 2019, leaving a balance of $116 thousand at the year ended February 28, 2019. This is a non-interest bearing loan as repayment is expected in the short-term.

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 at February 28, 2019 was $398 thousand with $209 thousand classified as a current as of February 28, 2019. Under the terms of the arrangement, $209 and $189 thousand are expected to be received in fiscal 2020 and 2021, respectively.

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Accrued Expenses and Warranty Obligations

12 Months Ended

Feb. 28, 2019

Accrued Expenses and Warranty Obligations

Note 5. Accrued Expenses and Warranty Obligations

The following provides a reconciliation of changes in the Company’s warranty reserve for fiscal years 2019 and 2018. The Company provides no other guarantees.

	2019			2018
Balance at beginning of year		127		$	127
Reduction in provision based on current year sales activity, net		(77	)		54
Warranty costs incurred		(13	)		(54	)
Balance at end of year		37		$	127

Accrued liabilities consisted of the following (in thousands):

	February 28, 2019		February 28, 2018
Accrued compensation and benefits	$	296	$	342
Accrued warranty		37		127
Accrued other		49		408
	$	382	$	877

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Stock Options

12 Months Ended

Feb. 28, 2019

Stock Options [Abstract]

Stock Options

Note 6. Stock Options

Upon recommendation of the Board of Directors of the Company, on August 25, 2006, the shareholders of the Company approved the Video Display Corporation 2006 Stock Incentive Plan (“Plan”), whereby options to purchase up to 500,000 shares of the Company’s common stock may be granted and up to 100,000 restricted common stock shares may be awarded. Options may not be granted at a price less than the fair market value, determined on the day the options are granted. Options granted to a participant who is the owner of ten percent or more of the common stock of the Company may not be granted at a price less than 110% of the fair market value, determined on the day the options are granted. The exercise price of each option granted is fixed and may not be re-priced. The life of each option granted is determined by the plan administrator, but may not exceed the lesser of seven years from the date the participant has the vested right to exercise the option, or nine years from the date of the grant. The life of an option granted to a participant who is the owner of ten percent or more of the common stock of the Company may not exceed five years from the date of grant. All full-time or part-time employees, and Directors of the Company, are eligible for participation in the Plan. In addition, any consultant or advisor who renders bona fide services to the Company, other than in connection with the offer or sale of securities in a capital-raising transaction, is eligible for participation in the Plan. The plan administrator is appointed by the Board of Directors of the Company. The Plan may be terminated by action of the Board of Directors, but in any event will terminate on the tenth anniversary of its effective date.

Information regarding the stock option plans is as follows:

	Number of Options (in thousands)			Average Exercise Price Per Share
Outstanding at February 28, 2017		69		$	3.46
Granted		200			0.82
Forfeited or expired		(69	)		3.46
Outstanding at February 28, 2018		200		$	0.82
Granted		—			—
Forfeited or expired		—			—
Outstanding at February 28, 2019		200		$	0.82
Options exercisable
February 28, 2018		60		$	0.82
February 28, 2019		107		$	0.82

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number Outstanding at February 28, 2019 (in thousands)	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price	Number Exercisable at February 28, 2019 (in thousands)	Weighted Average Exercise Price
$0.80  –  $1.00	200	7.0	$0.82	107	$0.82

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 be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock. The Company calculates the historic volatility based on the weekly stock closing price, adjusted for dividends and stock splits. The fair value of the stock options is based on the stock price at the time the option is granted, the annualized volatility of the stock and the discount rate at the grant date.

The Company granted 200 thousand stock options during fiscal 2018 with no options granted in fiscal 2019.

The fair value assumptions used for the stock options granted in fiscal 2018 were as follows:

Risk-free interest rate		1.50	%
Expected dividend yield		—
Expected volatility		63	%
Expected life in years		7
Service period in years		2
Weighted average calculated value of united granted	$	0.58

For the fiscal years ended February 28, 2019 and February 28, 2018, the Company recognized $18 and $68 thousand, respectively, of share-based compensation in general and administrative expense in the statements of operations. As of February 28, 2019, total unrecognized compensation costs related to stock options was $7 thousand. The amount of unrecognized share-based compensation cost will be recognized in fiscal 2020.

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Income Taxes

12 Months Ended

Feb. 28, 2019

Income Taxes

Note 7. Income Taxes

Due to the historical net losses reported by the Company and the conclusion that is is more likely than not that the company will not be able to utilize such net operating losses, there is no provision or benefit recorded related to income taxes in the consolidated statements of operations.

The rate reconciliation related to income taxes differs from the amount computed by applying the federal statutory rate of 21% for the fiscal year ended February 28, 2019 and 24% for the fiscal year ended February 28, 2018 is as follows (in thousands):

	Fiscal Year Ended
	February 28, 2019			February 28, 2018
Statutory U.S. federal income tax rate	$	17		$	(780	)
State income taxes, net of federal benefit		22			(31	)
Tax rate adjustment – 24% to 21%		—			2,243
Valuation allowance		(57	)		(1,593	)
Other		18			161
Taxes at effective income tax rate	$	—		$	—

The sources of the temporary differences and carry forwards, and their effect on the net deferred tax assets consisted of the following (in thousands):

	February 28, 2019			February 28, 2018
Current deferred tax assets (liabilities):
Uniform capitalization costs	$	85		$	88
Inventory reserves		211			336
Accrued liabilities		44			70
Allowance for doubtful accounts		4			5
Other		(10	)		(1	)
Valuation allowance		(334	)		(498	)
Net current deferred tax assets		—			—
Non-current deferred tax assets:
Amortization of intangibles		2			19
Deferred rent		—			14
Non-deductible losses		1,360			1,373
State net operating loss carry-forward		717			732
Federal net operating loss carry-forward		2,883			2,733
Federal tax credit carry forward		318			318
Foreign tax credit carry-forward		99			99
Basis difference of property, plant and equipment		43			33
Valuation allowance		(5,422	)		(5,321	)
Net non-current deferred tax assets		—			—
Net deferred tax assets	$	—		$	—

Deferred tax assets have been reduced by a valuation allowance because, in the opinion of management, it is more likely than not that the Company’s deferred tax assets will not be realized. The Company has determined that a 100% valuation allowance is needed due to historical cumulative taxable net operating losses and the limited taxable income related to the carry back periods. The Company has available federal and state net operating loss carryforwards of $13.7 million and $13.0 million, in the fiscal years ending February 28, 2019 and 2018, respectively. The net operating loss carryforwards expire at various dates through fiscal 2039, if not used.

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Benefit Plan

12 Months Ended

Feb. 28, 2019

Retirement Benefits [Abstract]

Benefit Plan

Note 8. Benefit Plan

The Company maintains defined contribution plans that are available to all employees. The Company did not make a contribution in the fiscal year ended February 28, 2019 or February 28, 2018 to the Company’s 401(k) plan.

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Commitments and Contingencies

12 Months Ended

Feb. 28, 2019

Commitments and Contingencies

Note 9. Commitments and Contingencies

Operating Leases

The Company leases various manufacturing facilities and transportation equipment under leases classified as operating leases, expiring at various dates through 2025. These leases provide that the Company pay taxes, insurance, and other expenses on the leased property and equipment. Rent expense for all leases was approximately $0.6 million and $1.1 million in fiscal 2019 and 2018, respectively.

Future minimum rental payments due under these leases are as follows (in thousands):

Fiscal Year	Amount
2020	$	577
2021		572
2022		572
2023		273
2024		190
2025		189
	$	2,373

Related Party Leases

Included above are leases for manufacturing and warehouse facilities leased from the Company’s chief executive officer and Ordway Properties, LLC (an entity in which the chief executive officer has an ownership interest in) under operating leases expiring at various dates through 2025. Rent expense under these leases totaled approximately $0.6 million in fiscal 2019 and $0.5 million in fiscal 2018.    

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 May 31, 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. The building is the facility for the Company’s Lexel Imaging subsidiary, which had previously signed a five (5) year lease agreement with Honeyhill Properties, LLC on June 15, 2017.

Future minimum rental payments due under leases with related parties are as follows (in thousands):

Fiscal Year	Amount
2020	$	390
2021		390
2022		390
2023		256
2024		190
2025		189
	$	1,805

Legal Proceedings

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.

On May 19, 2017, Lexel Imaging’s Chapter 11 Bankruptcy case was dismissed upon approval of a settlement agreement between Lexel Imaging (Lexel) and its landlord, Alidade Bull Lea, LLC (Alidade). The settlement agreement required Lexel to surrender possession of the rental property on or before September 30, 2017 and remit to Alidade all past due rent of approximately $232 thousand. Lexel was also required to make payments totaling $100 thousand into an escrow account by July 28, 2017. These funds were held by Alidade’s counsel until full and timely compliance with the settlement agreement was met, at which time the funds were returned to Lexel. The Company complied with all of the stipulations and successfully vacated the building on September 15, 2017.

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Concentrations of Risk and Major Customers

12 Months Ended

Feb. 28, 2019

Concentrations of Risk and Major Customers

Note 10. Concentrations of Risk and Major Customers

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, accounts receivable and historically investments prior to liquidation. At times, such cash in banks are in excess of the FDIC insurance limit.

The Company sells to a variety of domestic and international customers on an open-unsecured account basis, in certain cases requiring letters of credit. These customers principally operate in the medical, military, and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs, which comprised approximately 53% and 50% of consolidated net sales in fiscal 2019 and 2018, respectively. Sales to foreign customers were 11% and 16% of consolidated net sales in fiscal 2019 and 2018, respectively. The Company had three customers who each comprised more than 10% of the Company’s sales in fiscal year 2019 (aggregated 45%). These accounts are in good standing with the Company.

The Company attempts to minimize credit risk by reviewing all customers’ credit history before extending credit, by monitoring customers’ credit exposure on a daily basis and requiring letters of credit for certain sales. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

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Supplemental Cash Flow Information

12 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Information

Note 11. Supplemental Cash Flow Information

	Fiscal Year Ended (in thousands)
	February 28,			February 28,
	2019			2018
Cash paid for:
Interest	$	20		$	20
Income taxes, net of refunds	$	—		$	24
Non-cash activity:
Note receivable paid directly to officer	$	191		$	175
Note payable to officer	$	(191	)	$	(175	)
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note 9)	$	209			—
Imputed interest expense	$	45		$	62
Imputed interest income	$	(45	)	$	(62	)
Capital additions transferred from inventory	$	—		$	113

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Selected Quarterly Financial Data (unaudited)

12 Months Ended

Feb. 28, 2019

Selected Quarterly Financial Data (unaudited)

Note 12. Selected Quarterly Financial Data (unaudited)

The following table sets forth selected quarterly consolidated financial data for the fiscal years ended February 28, 2019 and February 28, 2018, respectively. The summation of quarterly net income (loss) per share may not agree with annual net income (loss) per share due to rounding:

	2019
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	4,021		$	3,321		$	4,170		$	3,511
Gross profit		996			879			1,096			1,069
Net income (loss)		54			(6	)		71			(52	)
Basic net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
Diluted net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
	2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	3,897		$	3,161		$	1,666		$	3,220
Gross profit (loss)		597			478			(144	)		(341	)
Net loss		(266	)		(221	)		(1,203	)		(1,248	)
Basic net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)
Diluted net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)

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Acquisition of Unicomp

12 Months Ended

Feb. 28, 2019

Acquisition of Unicomp

Note 13. – Acquisition of Unicomp

On October 23, 2017, the Company acquired Unicomp, Inc., a keyboard manufacturer for a purchase price of $200 thousand. The fair value related to the purchase price consideration was allocated to inventory. The Company paid $100 thousand in cash and a note with the seller for $100 thousand. The $100 thousand note is non-interest bearing and is payable at the completion of a product development plan by the previous owner which is expected in fiscal 2020. The Company acquired Unicomp as an opportunity to develop, market and sell Tempest keyboards for its cyber security division.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Feb. 28, 2019

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all intercompany accounts and transactions. Certain reclassifications have been made to prior year amounts to conform to the current year presentation.

Fiscal Year

Fiscal Year

All references herein to “2019” and “2018” mean the fiscal years ended February 28, 2019 and February 28, 2018, respectively.

Basis of Accounting

Basis of Accounting

“The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of authoritative accounting standards generally accepted in the United States of America (“U.S. GAAP”) recognized by the Financial Accounting Standards Board (“FASB”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. The FASB amends the FASB ASC through Accounting Standards Updates (“ASUs”). ASCs and ASUs are referred to throughout these consolidated financial statements.

Use Of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Examples include provisions for returns, warranty reserves, bad debts, inventory reserves, valuations on deferred income tax assets, other intangible assets, accounting for percentage of completion contracts and the length of product life cycles and fixed asset lives. Actual results could vary from these estimates.

Banking and Liquidity

Banking and Liquidity

The accompanying 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 had sustained losses for each of the three prior years, but did record a profit for the current fiscal year and has seen an increase in both its working capital and liquid assets during this current year. The historical losses resulted from a combination of low revenues at all divisions without a commensurate reduction of expenses. This year, the Company did increase sales and report a lower operating loss compared to the previous year. The Company’s working capital and liquid asset position is presented as follows:

	February 28, 2019		February 28, 2018
Working capital	$	3,354	$	2,762
Liquid assets	$	410	$	261

Management has implemented a plan to improve the liquidity of the Company. The Company has been implementing a plan to increase revenues at all the divisions, each structured to the particular division with an increase in revenues of over $3.0 million for fiscal year ended February 28, 2019. The Company is expanding 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 is also now involved in ruggedized displays, recently bringing on engineering familiar with these products. The Company implemented a plan to reduce expenses at the divisions, as well as at the corporate location during the fiscal year ending February 28, 2019 with the closing of two divisions and relocating the operations of those two divisions to other divisions within the Company with similar business activities. The Company is also in the process of moving the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The Company moved two of its plants in an effort to reduce expenses and increase efficiencies. The plant move at its subsidiary in Lexington, Kentucky, took longer than anticipated and negatively affected cash flow. The long term prospects for this subsidiary are promising and management is now seeing a turn around. The plant move at the Florida operations was successful as the Company merged two businesses and was able to keep production on schedule. 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 management’s plans to improve the operational effectiveness of the operations, to sell strategic assets as noted above, 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.

Revenue Recognition

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.

Contract liabilities represent amounts collected prior to having completed performance on certain of our simulation or video wall system projects. No revenue was recognized in 2019 from performance obligations that were satisfied in prior periods. As of February 28, 2019, approximately $521k of revenue is expected to be recognized from remaining performance obligations for simulation system projects (including deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods). We expect to recognize revenue these remaining performance obligations over the next 24 months. We have elected not to provide disclosures regarding remaining performance obligations for contracts with a term of 1 year or less.

For the fiscal year ended February 28, 2019, revenue recognized by division of the Company is as follows (in thousands):

Simulation and training (including video walls)	$	5,406
Cyber security		5,459
Data displays		2,533
Other computer products (keyboards)		1,436
Broadcast and control centers		189
Total revenue	$	15,023

Cash and Cash Equivalents and Investments

Cash and Cash Equivalents and Investments

We consider all highly liquid investments purchased with original maturities of three months or less to be cash or cash equivalents. Investment securities that are held by the Company, are bought and held principally for the purpose of selling them in the near term, are classified as “trading” and principally consist of equity securities and mutual funds. These trading investments are carried at fair value with realized gains or losses and changes in fair value included in operations. The Company liquidated its investment accounts in in fiscal 2019.

Fair Value Measurements and Financial Instruments

Fair Value Measurements and Financial Instruments

The FASB’s fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:

Level 1	Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis by the Company consisted of investment securities that were held for trading using Level 1 inputs. The Company liquidated all of its investment securities during the year ended February 28, 2019. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2018 (in thousands):

	February 28, 2018			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Stocks, options, and ETF (long)		291			291			—		—
Stocks, options, and ETF (short)		(5	)		(5	)
Total value of investments		286			286			—		—
Current liabilities:
Margin balance		(106	)		(106	)		—		—
Total value of liabilities		(106	)		(106	)		—		—
Total		180			180			—		—

The Company’s financial instruments which are not measured at fair value on the consolidated balance sheets include cash, accounts receivable, short-term liabilities, and debt. The estimated fair value of these financial instruments approximate cost due to the short period of time to maturity. Recorded amounts of long-term debt are considered to approximate fair value due to either rates that fluctuate with the market or are otherwise commensurate with the current market.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. The Company sells its products primarily to general contractors, government agencies, manufacturers, and consumers of video displays and CRTs. Management performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, letters of credit may be required from its customers in certain circumstances, such as foreign sales. The allowance for doubtful accounts is determined by reviewing all accounts receivable and applying credit loss experience to the current receivable portfolio with consideration given to the current condition of the economy, assessment of the financial position of the creditors as well as payment history and overall trends in past due accounts compared to established thresholds. The Company monitors credit exposure and assesses the adequacy of the allowance for doubtful accounts on a regular basis. Historically, the Company’s allowance has been sufficient for any customer write-offs. Management believes accounts receivable are stated at amounts expected to be collected.

The following is a roll-forward of the allowance for doubtful accounts (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	19	$	—	$	(3	)	$	16
February 28, 2018	$	20	$	—	$	(1	)	$	19

Warranty Reserves

Warranty Reserves

The Company records a liability for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available.

The warranty reserve is determined by recording a specific reserve for known warranty issues and a general reserve based on claims experience. The Company considers actual warranty claims compared to net sales, then adjusts its reserve liability accordingly. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Management believes that historically its procedures have been adequate and does not anticipate that its assumptions are reasonably likely to materially change in the future.

Inventories

Inventories

Inventories consist primarily of CRTs, electron guns, monitors, digital projectors, video components and electronic parts. Inventories are stated at the lower of cost (first-in, first-out) or market.

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. The reserve for inventory obsolescence was approximately $0.9 million and $1.4 million at February 28, 2019 and February 28, 2018, respectively.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company provides for an obsolescence 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, although it believes the inventory will be sold in the future, will continue to reserve for any additional obsolescence.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant, and equipment are stated at cost. Depreciation is computed principally by the straight-line method for financial reporting purposes over the following estimated useful lives: Buildings – ten to twenty-five years; Machinery and Equipment – five to ten years. In addition, leasehold improvements are amortized over the shorter of the useful life of the asset or the related lease term. Depreciation expense totaled approximately $256 thousand and $261 thousand for the fiscal years ended 2019 and 2018, respectively. Substantial betterments to property, plant, and equipment are capitalized and routine repairs and maintenance are expensed as incurred. The Company is expected to invest an additional $0.1 million to upgrade the Cocoa, Florida location to accommodate the increase in business at the Florida facility. The Company does not anticipate any additional significant investments in capital assets for fiscal 2020.

Management reviews and assesses long-lived assets, which includes property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, management estimates the future cash flows expected to result from the use of the asset. If the sum of the undiscounted expected cash flows is less than the carrying amount of the asset, an impairment loss is recognized based upon the estimated fair value of the asset.

Share-Based Compensation Plans

Share-Based Compensation Plans

The Company accounts for employee share-based compensation under the fair value method and uses an option pricing model for estimating the fair value of stock options at the date of grant.

Share Repurchase Program

Share Repurchase Program

The Company has a share 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. During the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares at an average price of $1.12 per share, which were added to treasury shares on the consolidated balance sheet, and during the fiscal year ended February 28, 2018, the Company repurchased 3,600 shares at an average price of $1.24 per share. Under this program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 28, 2019.

Income Taxes

Income Taxes

The Company accounts for income taxes under the asset and liability method which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred income taxes as of February 28, 2019 and February 28, 2018 reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of February 28, 2019 and February 28, 2018 the Company did not have any material unrecognized tax benefits.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income. The Company did not have any interest and penalties accrued as of February 28, 2019 and February 28, 2018.

The Company’s tax years ended February 28, 2018, 2017 and 2016 remain open to examination by the Internal Revenue Service (“IRS”).

Earnings (Loss) per Share

Earnings (Loss) per Share

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

The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share for 2019 and 2018, (in thousands, except for per share data):

	Net Income (Loss)			Average Shares Outstanding		Net Income (Loss) Per Share
2019
Basic		67			5,879		0.01
Effect of dilution:
Options		—			200		—
Diluted earnings per share		67			6,079		0.01
2018
Basic	$	(2,938	)		5,890	$	(0.50	)
Effect of dilution:
Options		—			—		—
Diluted earnings per share	$	(2,938	)		5,890	$	(0.50	)

Stock options, debentures, and other liabilities convertible into 200,000 shares, of the Company’s common stock were anti-dilutive and, therefore, were excluded from the fiscal 2018 diluted earnings (loss) per share calculation.

Segment Reporting

Segment Reporting

An operating segment is defined as a component that engages in business activities, whose operating results are reviewed by the chief operating decision maker in order to make decisions about allocating resources, and for which discrete financial information is available. We operate and manage our business as one reportable segment. All of our divisions have similarities such as products and markets served; therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, these operations are reported as one segment within the consolidated financial statements.

Sales to foreign customers were 11% and 16% of consolidated net sales for fiscal 2019 and fiscal 2018, respectively.

Recent Accounting Pronouncements

New Accounting Pronouncements Adopted in Fiscal 2019

Effective March 1, 2018 we adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers and the additional related ASUs (codified in “ASC 606”), which replaces existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under GAAP. We elected the modified retrospective method upon adoption (applied to those contracts which were not completed as of March 1, 2018) with no impact to opening retained earnings or revenue reported. Results of reporting periods beginning on or after March 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported under the previous revenue recognition standard (ASC 605).

New Accounting Pronouncements Not Yet Adopted as of February 28, 2019

In February 2016, the FASB issued ASU 2016-02, “Leases”. The final guidance requires lessees to recognize a right-of-use asset and a lease liability for all leases (with the exception of short-term leases) at the commencement date and recognize expenses on their income statements similar to the current Topic 840, Leases. It is effective for fiscal years and interim periods beginning after December 15, 2018 and early adoption is permitted. We plan to adopt the new standard effective March 1, 2019 using the modified retrospective approach, which allows application of the standard at the adoption date rather than at the beginning of the earliest comparative period presented. We expect to elect the package of available practical expedients that will enable us to retain the lease classification and initial direct costs for any leases that existed prior to the adoption of the standard and will not reassess whether any contracts executed prior to the adoption of the standard are or contain leases. We expect that the adoption of this standard will result in the recognition of material right-of-use assets and corresponding liabilities in our consolidated balance sheets, but do not expect the adoption to have a material impact on our consolidated statements of operations or our consolidated statements of cash flows. The adoption of this standard will result in expanded lease related disclosures in the notes to our consolidated financial statements. While we are currently evaluating the final impact the adoption of this standard will have, we have identified existing lease contracts, have prepared and reviewed the necessary entries for the transition, and are updating our controls and procedures for leases under the new standard.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Feb. 28, 2019

Working Capital and Liquid Asset Position

The Company’s working capital and liquid asset position is presented as follows:

	February 28, 2019		February 28, 2018
Working capital	$	3,354	$	2,762
Liquid assets	$	410	$	261

Schedule Of Revenue Recognized

For the fiscal year ended February 28, 2019, revenue recognized by division of the Company is as follows (in thousands):

Simulation and training (including video walls)	$	5,406
Cyber security		5,459
Data displays		2,533
Other computer products (keyboards)		1,436
Broadcast and control centers		189
Total revenue	$	15,023

Financial Assets and Liabilities Measured on Recurring Basis

The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2018 (in thousands):

	February 28, 2018			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Stocks, options, and ETF (long)		291			291			—		—
Stocks, options, and ETF (short)		(5	)		(5	)
Total value of investments		286			286			—		—
Current liabilities:
Margin balance		(106	)		(106	)		—		—
Total value of liabilities		(106	)		(106	)		—		—
Total		180			180			—		—

Roll-forward of Allowance for Doubtful Accounts

The following is a roll-forward of the allowance for doubtful accounts (in thousands):

Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	19	$	—	$	(3	)	$	16
February 28, 2018	$	20	$	—	$	(1	)	$	19

Reconciliation of Basic Earnings (Loss) Per Share to Diluted Earnings (Loss) Per Share

The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share for 2019 and 2018, (in thousands, except for per share data):

	Net Income (Loss)			Average Shares Outstanding		Net Income (Loss) Per Share
2019
Basic		67			5,879		0.01
Effect of dilution:
Options		—			200		—
Diluted earnings per share		67			6,079		0.01
2018
Basic	$	(2,938	)		5,890	$	(0.50	)
Effect of dilution:
Options		—			—		—
Diluted earnings per share	$	(2,938	)		5,890	$	(0.50	)

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Inventories (Tables)

12 Months Ended

Feb. 28, 2019

Inventories

Inventories consisted of the following (in thousands):

	February 28,			February 28,
	2019			2018
Raw materials	$	2,973		$	4,657
Work-in-process		706			403
Finished goods		631			923
		4,310			5,983
Reserves for obsolescence		(859	)		(1,399	)
	$	3,451		$	4,584

Roll forward of Inventory Reserves

The following is a roll forward of the Inventory Reserves (in thousands):

			Additions:
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions			Balance at End of Period
February 28, 2019	$	1,399	$	346	$	(886	)	$	859
February 28, 2018	$	1,899	$	673	$	(1,173	)	$	1,399

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Line of Credit and Long-Term Debt (Tables)

12 Months Ended

Feb. 28, 2019

Long- Term debt

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

	February 28, 2019			February 28, 2018
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 of $5 thousand payable through July 2019; collateralized by land and building of Teltron Technologies, Inc.	$	23		$	78
		23			78
Less current maturities		(23	)		(55	)
	$	—		$	23

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Accrued Expenses and Warranty Obligations (Tables)

12 Months Ended

Feb. 28, 2019

Reconciliation of Changes in Warranty Reserve

The following provides a reconciliation of changes in the Company’s warranty reserve for fiscal years 2019 and 2018. The Company provides no other guarantees.

	2019			2018
Balance at beginning of year		127		$	127
Reduction in provision based on current year sales activity, net		(77	)		54
Warranty costs incurred		(13	)		(54	)
Balance at end of year		37		$	127

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):

	February 28, 2019		February 28, 2018
Accrued compensation and benefits	$	296	$	342
Accrued warranty		37		127
Accrued other		49		408
	$	382	$	877

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Stock Options (Tables)

12 Months Ended

Feb. 28, 2019

Information Regarding Stock Option Plans

Information regarding the stock option plans is as follows:

	Number of Options (in thousands)			Average Exercise Price Per Share
Outstanding at February 28, 2017		69		$	3.46
Granted		200			0.82
Forfeited or expired		(69	)		3.46
Outstanding at February 28, 2018		200		$	0.82
Granted		—			—
Forfeited or expired		—			—
Outstanding at February 28, 2019		200		$	0.82
Options exercisable
February 28, 2018		60		$	0.82
February 28, 2019		107		$	0.82

	Options Outstanding			Options Exercisable
Range of Exercise Prices	Number Outstanding at February 28, 2019 (in thousands)	Weighted Average Remaining Contractual Life (in years)	Weighted Average Exercise Price	Number Exercisable at February 28, 2019 (in thousands)	Weighted Average Exercise Price
$0.80  –  $1.00	200	7.0	$0.82	107	$0.82

Assumptions Used in Calculating Fair Value and Calculated Weighted Average Value of Units

The fair value assumptions used for the stock options granted in fiscal 2018 were as follows:

Risk-free interest rate		1.50	%
Expected dividend yield		—
Expected volatility		63	%
Expected life in years		7
Service period in years		2
Weighted average calculated value of united granted	$	0.58

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Income Taxes (Tables)

12 Months Ended

Feb. 28, 2019

Income Tax Disclosure [Abstract]

Provision for Income Taxes Differs from Amount Computed by Applying Federal Statutory Rate

The rate reconciliation related to income taxes differs from the amount computed by applying the federal statutory rate of 21% for the fiscal year ended February 28, 2019 and 24% for the fiscal year ended February 28, 2018 is as follows (in thousands):

	Fiscal Year Ended
	February 28, 2019			February 28, 2018
Statutory U.S. federal income tax rate	$	17		$	(780	)
State income taxes, net of federal benefit		22			(31	)
Tax rate adjustment – 24% to 21%		—			2,243
Valuation allowance		(57	)		(1,593	)
Other		18			161
Taxes at effective income tax rate	$	—		$	—

Sources of Temporary Differences and Carry Forwards, and Their Effect on Net Deferred Tax Asset

The sources of the temporary differences and carry forwards, and their effect on the net deferred tax assets consisted of the following (in thousands):

	February 28, 2019			February 28, 2018
Current deferred tax assets (liabilities):
Uniform capitalization costs	$	85		$	88
Inventory reserves		211			336
Accrued liabilities		44			70
Allowance for doubtful accounts		4			5
Other		(10	)		(1	)
Valuation allowance		(334	)		(498	)
Net current deferred tax assets		—			—
Non-current deferred tax assets:
Amortization of intangibles		2			19
Deferred rent		—			14
Non-deductible losses		1,360			1,373
State net operating loss carry-forward		717			732
Federal net operating loss carry-forward		2,883			2,733
Federal tax credit carry forward		318			318
Foreign tax credit carry-forward		99			99
Basis difference of property, plant and equipment		43			33
Valuation allowance		(5,422	)		(5,321	)
Net non-current deferred tax assets		—			—
Net deferred tax assets	$	—		$	—

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Commitments and Contingencies (Tables)

12 Months Ended

Feb. 28, 2019

Future Minimum Rental Payments

Future minimum rental payments due under these leases are as follows (in thousands):

Fiscal Year	Amount
2020	$	577
2021		572
2022		572
2023		273
2024		190
2025		189
	$	2,373

Chief Executive Officer and Ordway Properties, LLC

Future Minimum Rental Payments

Future minimum rental payments due under leases with related parties are as follows (in thousands):

Fiscal Year	Amount
2020	$	390
2021		390
2022		390
2023		256
2024		190
2025		189
	$	1,805

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Supplemental Cash Flow Information (Tables)

12 Months Ended

Feb. 28, 2019

Supplemental Cash Flow Information

	Fiscal Year Ended (in thousands)
	February 28,			February 28,
	2019			2018
Cash paid for:
Interest	$	20		$	20
Income taxes, net of refunds	$	—		$	24
Non-cash activity:
Note receivable paid directly to officer	$	191		$	175
Note payable to officer	$	(191	)	$	(175	)
Reduction of accrued rent in lieu of cash received resulting from sale of remaining interest in Honeyhill interest (Note 9)	$	209			—
Imputed interest expense	$	45		$	62
Imputed interest income	$	(45	)	$	(62	)
Capital additions transferred from inventory	$	—		$	113

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Selected Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Feb. 28, 2019

Disclosure Text Block [Abstract]

Quarterly Financial Information [Table Text Block]

The following table sets forth selected quarterly consolidated financial data for the fiscal years ended February 28, 2019 and February 28, 2018, respectively. The summation of quarterly net income (loss) per share may not agree with annual net income (loss) per share due to rounding:

	2019
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	4,021		$	3,321		$	4,170		$	3,511
Gross profit		996			879			1,096			1,069
Net income (loss)		54			(6	)		71			(52	)
Basic net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
Diluted net income (loss) per share	$	0.01		$	(0.00	)	$	0.01		$	(0.01	)
	2018
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	3,897		$	3,161		$	1,666		$	3,220
Gross profit (loss)		597			478			(144	)		(341	)
Net loss		(266	)		(221	)		(1,203	)		(1,248	)
Basic net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)
Diluted net loss per share	$	(0.05	)	$	(0.04	)	$	(0.20	)	$	(0.21	)

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Working Capital and Liquid Asset Position (Detail) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018
Liquidity And Capital Resources [Line Items]
Working capital	$ 3,354	$ 2,762
Liquid assets	$ 410	$ 261

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Schedule of Revenue Recognized (Detail) $ in Thousands	12 Months Ended
	Feb. 28, 2019 USD ($)
Revenues	$ 15,023
Simulation and training
Revenues	5,406
Cyber security
Revenues	5,459
Data displays
Revenues	2,533
Other computer products
Revenues	1,436
Broadcast and control centers
Revenues	$ 189

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Summary of Significant Accounting Policies - Additional Information (Detail) $ / shares in Units, $ in Thousands	12 Months Ended
	Feb. 28, 2019 USD ($) Segment $ / shares shares	Feb. 28, 2018 USD ($) $ / shares shares	Jan. 20, 2014 shares
Summary Of Significant Accounting Policies Line Items [Line Items]
Reserves for obsolescence | $	$ 859	$ 1,399
Stock options, debentures, and other liabilities convertible into shares excluded from diluted earnings per (loss) share calculation | shares | shares		200,000
Depreciation expense | $	256	$ 261
Investment on operating properties | $	$ 100
Authorized stock repurchase | shares	2,632,500
Additional authorized stock repurchase | shares			1,500,000
Repurchase of treasury stock (in shares) | shares	8,858	3,600
Average cost of repurchase shares | $ / shares	$ 1.12	$ 1.24
Remaining repurchase of shares authorized | shares	490,186
Increase In Revenues | $	$ 3,000
Number of reportable segments | Segment	1
Remaining performance obligations | $	$ 521
Revenue, Performance Obligation, Description of Timing	We expect to recognize revenue these remaining performance obligations over the next 24 months. We have elected not to provide disclosures regarding remaining performance obligations for contracts with a term of 1 year or less.
Building | Maximum
Summary Of Significant Accounting Policies Line Items [Line Items]
Useful life	20 years
Building | Minimum
Summary Of Significant Accounting Policies Line Items [Line Items]
Useful life	10 years
Machinery and Equipment | Maximum
Summary Of Significant Accounting Policies Line Items [Line Items]
Useful life	10 years
Machinery and Equipment | Minimum
Summary Of Significant Accounting Policies Line Items [Line Items]
Useful life	5 years
FLORIDA
Summary Of Significant Accounting Policies Line Items [Line Items]
Number of merged businesses	2
Number of consolidated Facilities	1
Customer Concentration Risk | Sales Revenue, Goods, Net
Summary Of Significant Accounting Policies Line Items [Line Items]
Concentration risk, percentage of consolidated net sales	45.00%
Customer Concentration Risk | Non-US | Sales Revenue, Goods, Net
Summary Of Significant Accounting Policies Line Items [Line Items]
Concentration risk, percentage of consolidated net sales	11.00%	16.00%

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Financial Assets and Liabilities Measured on a Recurring Basis (Detail) - Recurring Basis $ in Thousands	Feb. 28, 2018 USD ($)
Current trading investments
Total value of investments	$ 286
Current liabilities:
Margin balance	(106)
Total value of liabilities	(106)
Total	180
Stocks, options, and ETF (long)
Current trading investments
Current trading investments	291
Stocks, options, and ETF (short)
Current trading investments
Current trading investments	(5)
Level 1 Assets and Liabilities
Current trading investments
Total value of investments	286
Current liabilities:
Margin balance	(106)
Total value of liabilities	(106)
Total	180
Level 1 Assets and Liabilities | Stocks, options, and ETF (long)
Current trading investments
Current trading investments	291
Level 1 Assets and Liabilities | Stocks, options, and ETF (short)
Current trading investments
Current trading investments	$ (5)

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Roll-forward of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Balance at Beginning of Period	$ 19	$ 20
Deductions	(3)	(1)
Balance at End of Period	$ 16	$ 19

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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								12 Months Ended
	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Feb. 28, 2018	Nov. 30, 2017	Aug. 31, 2017	May 31, 2017	Feb. 28, 2019	Feb. 28, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net Income (Loss), Basic	$ (52)	$ 71	$ (6)	$ 54	$ (1,248)	$ (1,203)	$ (221)	$ (266)	$ 67	$ (2,938)
Net Income (Loss), Diluted earnings per share									$ 67	$ (2,938)
Average Shares Outstanding, Basic									5,879	5,890
Average Shares Outstanding, Options									200
Average Shares Outstanding, Diluted earnings per share									6,079	5,890
Net Income(Loss) Per Share, Basic	$ (0.01)	$ 0.01	$ 0.00	$ 0.01	$ (0.21)	$ (0.20)	$ (0.04)	$ (0.05)	$ 0.01	$ (0.50)
Net Income(Loss) Per Share, Diluted earnings per share	$ (0.01)	$ 0.01	$ 0.00	$ 0.01	$ (0.21)	$ (0.20)	$ (0.04)	$ (0.05)	$ 0.01	$ (0.50)

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Inventories- Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Inventory [Line Items]
Wrote off or disposed off inventories	$ 0.9	$ 1.1

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Inventories (Detail) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018
Inventory [Line Items]
Raw materials	$ 2,973	$ 4,657
Work-in-process	706	403
Finished goods	631	923
Inventory, Gross	4,310	5,983
Reserves for obsolescence	(859)	(1,399)
Inventory, Net	$ 3,451	$ 4,584

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Roll Forward of Inventory Reserves (Detail) - Inventory Valuation Reserve - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Inventory [Line Items]
Balance at Beginning of Period	$ 1,399	$ 1,899
Additions:Charged to Costs and Expenses	346	673
Deductions	(886)	(1,173)
Balance at End of Period	$ 859	$ 1,399

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Line of Credit and Long-Term Debt - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Debt Instrument [Line Items]
Line of credit, current balance		$ 227
Line of credit maturity date	Aug. 15, 2019
Interest rate description	interest rate of LIBOR plus 3.75%
Outstanding margin account borrowings	$ 100
Long-term debt, less current maturities	$ 0	23
Margin interest rate	2.00%
Gross investments		300
Line of Credit | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Line of credit facility, interest rate	3.75%
Long-term Debt
Debt Instrument [Line Items]
Long-term debt, less current maturities	$ 23
Limited Liability Company [Member]
Debt Instrument [Line Items]
Line of credit, current balance	200
Outstanding margin account borrowings		$ 100
Brand Banking Company
Debt Instrument [Line Items]
Line of credit	$ 500

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Long-Term Debt (Detail) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018
Debt Instrument [Line Items]
Notes and Mortgage Payable to bank	$ 23	$ 78
Less current maturities	(23)	(55)
Long-term debt, less current maturities	0	23
Mortgage payable to bank
Debt Instrument [Line Items]
Notes and Mortgage Payable to bank	$ 23	$ 78

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Long-Term Debt (Parenthetical) (Detail) - Mortgage payable to bank $ in Thousands	12 Months Ended
	Feb. 28, 2019 USD ($)
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 of $5 thousand payable through July 2019; collateralized by land and building of Teltron Technologies, Inc.
Combined rate	6.00%
Mortgage Payable to bank monthly principal and interest payments payable	$ 5
Debt Instrument Maturity period	2019-07
Base Rate
Debt Instrument [Line Items]
Interest rate	0.50%

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Notes Receivable and Payable to Officers and Directors (Related Party Transactions) -Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended
	Mar. 30, 2016	Feb. 28, 2021	Feb. 29, 2020	Feb. 28, 2019	Feb. 28, 2018
Z-Axis Inc
Related Party Transaction [Line Items]
Notes receivable assigned with recourse	$ 912			$ 398
Notes repurchase right, percentage of outstanding principle balance	80.00%
Secured borrowing	$ 900
Effective interest rate	9.00%
Payment period	56 months
Date of first required payment	Apr. 16, 2016
Notes payable to officers and directors				209
Z-Axis Inc | Scenario, Forecast [Member]
Related Party Transaction [Line Items]
Notes receivable assigned with recourse		$ 189	$ 209
Chief Executive Officer
Related Party Transaction [Line Items]
Note payable to officer				$ 290	$ 116

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Reconciliation of Changes in Warranty Reserve (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Warranty Liability [Line Items]
Balance at beginning of year	$ 127	$ 127
Reduction in provision based on current year sales activity, net	(77)	54
Warranty costs incurred	(13)	(54)
Balance at end of year	$ 37	$ 127

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Accrued Liabilities (Detail) - USD ($) $ in Thousands	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Schedule of Accrued Liabilities [Line Items]
Accrued compensation and benefits	$ 296	$ 342
Accrued warranty	37	127	$ 127
Accrued other	49	408
Accrued Customer Deposit and Accrued Liabilities Current, Total	$ 382	$ 877

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Stock Options - Additional Information (Detail) - USD ($) $ in Thousands		12 Months Ended
	Aug. 25, 2006	Feb. 28, 2019	Feb. 28, 2018
Share based compensation arrangement expiration date		Aug. 25, 2006
Granted		0	200,000
Total unrecognized compensation costs related to stock options and shares of restricted stock granted		$ 7
Unrecognized compensation cost is expected to be recognized over a period		1 year
General and Administrative
Share-based compensation		$ 18	$ 68
Stock Options
Shares approved for Purchase	500,000
Stock option granted price percentage	10.00%
Stock option granted ownership percentage	110.00%
Life of option granted	7 years
Vesting period	9 years
Restricted Stock
Shares approved for Purchase	100,000

XML

Information Regarding Stock Option Plans (Detail) - $ / shares shares in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Number of Shares
Beginning Balance	200	69
Granted	0	200
Forfeited or expired		(69)
Ending Balance	200	200
Options exercisable	107	60
Average Exercise Price Per Share
Beginning Balance	$ 0.82	$ 3.46
Granted		0.82
Forfeited or expired		3.46
Ending Balance	0.82	0.82
Options exercisable	$ 0.82	$ 0.82

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Information Regarding Stock Option Plans (Detail 1) - $ / shares shares in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018	Feb. 28, 2017
Ranges of Exercise Prices	$ 0.82	$ 0.82	$ 3.46
Number Outstanding	200	200	69
Weighted Average Remaining Contractual Life	7 years
Number of Exercisable	107	60
Weighted Average Exercise Price	$ 0.82	$ 0.82
Minimum [Member]
Ranges of Exercise Prices	0.80
Maximum [Member]
Ranges of Exercise Prices	$ 1.00

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Assumptions Used in Calculating Fair Value and Calculated Weighted Average Value of Units (Detail) - $ / shares	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Weighted average calculated value of united granted		$ 0.82
Stock Options
Risk-free interest rate		1.50%
Expected dividend yield		8212.00%
Expected volatility		63.00%
Expected life in years		7 years
Service period in years		2 years
Weighted average calculated value of united granted		$ 0.58

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Income Taxes [Line Items]
Federal statutory rate	21.00%	24.00%
Income tax expense
Deferred tax assets valuation allowance percentage	100.00%
Operating loss carryforwards expiration year	2039
Federal and State
Income Taxes [Line Items]
Operating loss carryforwards	$ 13.7	$ 13.0

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Provision for Income Taxes Differs from Amount Computed by Applying Federal Statutory Rate (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Statutory U.S. federal income tax rate	$ 17	$ (780)
State income taxes, net of federal benefit	22	(31)
Tax rate adjustment – 24% to 21%	0	2,243
Valuation allowance	(57)	(1,593)
Other	18	161
Taxes at effective income tax rate

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Sources of Temporary Differences and Carry Forwards, and Their Effect on Net Deferred Tax Asset (Detail) - USD ($) $ in Thousands	Feb. 28, 2018	Feb. 28, 2017
Current deferred tax assets(liabilities):
Uniform capitalization costs	$ 85	$ 88
Inventory reserves	211	336
Accrued liabilities	44	70
Allowance for doubtful accounts	4	5
Other	(10)	(1)
Valuation allowance	(334)	(498)
Net current deferred tax assets	0	0
Non-current deferred tax assets:
Amortization of intangibles	2	19
Deferred rent	0	14
Non-deductible losses	1,360	1,373
State net operating loss carry-forward	717	732
Federal net operating loss carry-forward	2,883	2,733
Federal tax credit carry forward	318	318
Foreign tax credit carry-forward	99	99
Basis difference of property, plant and equipment	43	33
Valuation allowance	(5,422)	(5,321)
Net non-current deferred tax assets	0	0
Net deferred tax assets	$ 0	$ 0

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Benefit Plan - Additional Information (Detail) - USD ($)	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined contribution	$ 0	$ 0

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Commitments and Contingencies - Additional Information (Detail) - USD ($)		9 Months Ended		12 Months Ended
	Jul. 03, 2017	Nov. 30, 2018	Nov. 30, 2017	Feb. 28, 2019	Feb. 28, 2018
Commitment And Contingencies [Line Items]
Lease Rent Expense				$ 600,000	$ 1,100,000
Lexel Imaging Inc
Commitment And Contingencies [Line Items]
Escrow amount deposit				$ 100,000
Escrow deposit period				Jul. 28, 2017
Bankruptcy proceedings description				Lexel Imaging’s Chapter 11 Bankruptcy case was dismissed upon approval of a settlement agreement between Lexel Imaging (Lexel) and its landlord, Alidade Bull Lea, LLC (Alidade). The settlement agreement required Lexel to surrender possession of the rental property on or before September 30, 2017 and remit to Alidade all past due rent of approximately $232 thousand.
Lexel Imaging Inc | Property Lease Guarantee
Commitment And Contingencies [Line Items]
Litigation settlement amount				$ 232,000
Maximum [Member]
Commitment And Contingencies [Line Items]
Lease Expiration Year				2025
Chief Executive Officer and Ordway Properties, LLC
Commitment And Contingencies [Line Items]
Lease Rent Expense				$ 600,000	$ 500,000
Chief Executive Officer and Ordway Properties, LLC | Maximum [Member]
Commitment And Contingencies [Line Items]
Lease Expiration Year				2025
Honeyhill Properties LLC [Member]
Commitment And Contingencies [Line Items]
Purchase of related party	$ 1,500,000
Investment towards cost method investments	$ 500,000
Gain (loss) on sale of business				$ 0
Honeyhill Properties LLC [Member] | Ordway Properties, LLC
Commitment And Contingencies [Line Items]
Reduction in sale of shares to related party, amount			$ 125,000
Proceeds from ownership interest in cash		$ 166,457
Forgiveness of rent accrued and owed		208,543
Ownership Interest Transfered		$ 375,000

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Future Minimum Rental Payments (Detail) $ in Thousands	Feb. 28, 2019 USD ($)
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items]
2020	$ 577
2021	572
2022	572
2023	273
2024	190
2025	189
Operating Leases, Future Minimum Payments Due, Total	$ 2,373

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Future Minimum Rental Payments under Related Party Leases (Detail) $ in Thousands	Feb. 28, 2019 USD ($)
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items]
2020	$ 577
2021	572
2022	572
2023	273
2024	190
2025	189
Operating Leases, Future Minimum Payments Due, Total	2,373
Chief Executive Officer and Ordway Properties, LLC
Schedule Of Future Minimum Rental Payments For Operating Leases [Line Items]
2020	390
2021	390
2022	390
2023	256
2024	190
2025	189
Operating Leases, Future Minimum Payments Due, Total	$ 1,805

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Concentrations of Risk and Major Customers - Additional Information (Detail) - Customer Concentration Risk - customer	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Concentration Risk [Line Items]
Number of customer	3
Sales Revenue, Net [Member]
Concentration Risk [Line Items]
Concentration risk, percentage of consolidated net sales	45.00%
Sales Revenue, Net [Member] | Non-US [Member]
Concentration Risk [Line Items]
Concentration risk, percentage of consolidated net sales	11.00%	16.00%
Sales Revenue, Net [Member] | UNITED STATES
Concentration Risk [Line Items]
Concentration risk, percentage of consolidated net sales	53.00%	50.00%

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Supplemental Cash Flow Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Feb. 28, 2019	Feb. 28, 2018
Cash paid for:
Interest	$ 20	$ 20
Income taxes, net of refunds	0	24
Non-cash activity:
Note receivable paid directly to officer	191	175
Note payable to officer	(191)	(175)
Imputed interest expense	45	62
Imputed interest income	(45)	(62)
Capital additions transferred from inventory	0	113
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 9)	$ 209	$ 0

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Quarterly Consolidated Financial Data (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Feb. 28, 2019	Nov. 30, 2018	Aug. 31, 2018	May 31, 2018	Feb. 28, 2018	Nov. 30, 2017	Aug. 31, 2017	May 31, 2017	Feb. 28, 2019	Feb. 28, 2018
Selected Quarterly Financial Data [Line Items]
Net Sales	$ 3,511	$ 4,170	$ 3,321	$ 4,021	$ 3,220	$ 1,666	$ 3,161	$ 3,897	$ 15,023	$ 11,944
Gross profit	1,069	1,096	879	996	(341)	(144)	478	597	4,040	590
Net income (loss)	$ (52)	$ 71	$ (6)	$ 54	$ (1,248)	$ (1,203)	$ (221)	$ (266)	$ 67	$ (2,938)
Basic net income (loss) per share	$ (0.01)	$ 0.01	$ 0.00	$ 0.01	$ (0.21)	$ (0.20)	$ (0.04)	$ (0.05)	$ 0.01	$ (0.50)
Diluted net income (loss) per share	$ (0.01)	$ 0.01	$ 0.00	$ 0.01	$ (0.21)	$ (0.20)	$ (0.04)	$ (0.05)	$ 0.01	$ (0.50)

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Acquisition of Unicomp - Additional Information (Detail) - USD ($) $ in Thousands		12 Months Ended
	Oct. 23, 2017	Feb. 28, 2018
Business Combination Allocation Of Purchase Price [Line Items]
Cash paid on acquisition		$ 100
Unicompinc. [Member]
Business Combination Allocation Of Purchase Price [Line Items]
Purchase price for acquisition	$ 200
Cash paid on acquisition	100
Unicompinc. [Member] | Non-Interest Bearing Note Payable
Business Combination Allocation Of Purchase Price [Line Items]
Notes payable	$ 100