Banking & Liquidity

9 Months Ended

Nov. 30, 2020

Note 2. – Banking & Liquidity

The accompanying unaudited interim condensed consolidated financial statements were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company reported a net profit for the three and nine month period ending November 30, 2020 primarily resulting from a $216 thousand gain recorded resulting from the forgiveness and related extinguishment of the debt (Note 5) and a $1,724 gain recognized on the sale of a building (Note 6). These gains are recorded in Other, net income in the condensed consolidated statements of operations. The Company had an increase in working capital, but had a decrease in liquid assets for the nine month period primarily as a result of a sale of a property it owned in the third quarter and using the proceeds to reduce current debt. The Company has sustained losses for the last four of five fiscal years and has seen overall a decline in working capital and liquid assets during this five year period. Annual losses over this time are due to a combination of decreasing revenues across certain divisions without a commensurate reduction of expenses. The Company has seen a rise in revenues this year and increased activity within the markets it serves. The Company expanded its revenues and markets with an acquisition in January, 2020 of a small display company. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2020 and February 29, 2020:


	November 30, 2020		February 29, 2020
Working capital	$	2,744	$	1,263
Liquid assets	$	342	$	844

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. The fiscal year ended February 29, 2020 was a transition year for the Company. Many of the legacy programs the Company serviced were heading into new phases or the next generation of the product line. This caused delays in the normal flow of the orders for these programs. The Company is working with these customers and has received orders for one of these programs and expects other programs to be placing orders to be fulfilled in the next fiscal year. Also, the Company completed the transfer of its remaining CRT operations to its Lexel Imaging facility in Lexington, KY in fiscal 2021 which will reduce expenses in the CRT operation by having that business all under one roof. The Company also moved the corporate accounting functions to the Cocoa, Florida location in fiscal 2020 which allows the Company to become more efficient and save money on reducing redundant operations. Management continues to explore options to increase the liquidity of the Company. If additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.

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