Note 2 - Going Concern, Banking & Liquidity

3 Months Ended

May 31, 2023

Notes to Financial Statements

Going Concern, Banking, and Liquidity [Text Block]

Note 2. – Going Concern, 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 loss and a decrease in working capital for the three-month period ending May 31, 2023 primarily due to insufficient revenues in the Company. The Company also had a decrease in liquid assets for the three- month period primarily as a result of the lack of revenue. The Company has sustained losses for the last three 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 the divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of May 31, 2023 and February 28, 2023:

	May 31, 2023			February 28, 2023
Working capital	$	(1,463	)	$	(1,297	)
Liquid assets	$	238		$	400

The Company has increased marketing efforts in its ruggedized displays, and small specialty displays in an effort to increase revenue. New products in the ruggedized area have been and are being developed. The Company will begin production in the next quarter on two new products and an updated product it has been selling for years. The Company has orders in house for all three of these products. In addition, the Company has continued to streamline its operations and is focusing on increasing revenues by executing initiatives such as upgrading its sales and marketing efforts including targeting efforts towards repeatable business, the hiring of an experienced Rugged Display Business Development Manager, signing with a manufacturer’s representative which specializes in the Rugged Display business, increased customer visits, trade shows and e-mail blasts to market all the product lines it sells. The Company's revenues were down compared to the prior year quarter due to supply chain issues and engineering delays on the new products. The Lexel Imaging facility in Lexington, KY is working with some customers on last time buys for certain types of CRTs while also exploring new opportunities that are a fit for the division. Unicomp, the Company’s keyboard manufacturer, has increased sales over last year by getting a new product to market. The Company moved 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 former headquarters and distribution center in Tucker, Georgia closed as of March 31, 2022.

Video Display Corporation and Subsidiaries

May 31, 2023

In order to assist funding operating activity, the Company’s CEO loaned an additional $80,000 to the Company during the first quarter of fiscal year 2024. There is no line of credit outstanding or other financing currently in place other than the note payable with the Company's CEO with a balance of $1,464,000. There are no repayment terms related to the loan, however, the Company plans to repay the note within the next twelve months and therefore has classified the loan as a current liability on the condensed consolidated balance sheet as of May 31, 2023.

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 creates substantial doubt about the ability of the Company to continue as a going concern.