Note 2 - Going Concern, Banking & Liquidity

9 Months Ended

Nov. 30, 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 nine-month period ending November 30, 2023 primarily due to insufficient revenues in the Company. The Company also had a decrease in liquid assets for the nine- month period primarily as a result of the lack of revenue. 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 the divisions without a commensurate reduction of expenses. The Company’s working capital and liquid asset position are presented below (in thousands) as of November 30, 2023 and February 28, 2023:

	November 30, 2023			February 28, 2023
Working capital	$	(1,575	)	$	(1,297	)
Liquid assets	$	136		$	400

The Company has focused on building the rugged and specialty display business at the Cocoa, Florida subsidiary. The Company has four primary display lines in production with one more expected to be added in fiscal year 2024. There had been some unforeseen delays causing two of these product lines to be delayed in shipping, but most of these issues were resolved with one of the products shipping in the third quarter and the other is expected to ship in the Company’s fourth quarter. All of these current product lines are repeat business which should sustain the Company going forward. The Company is looking at ways to restructure its TEMPEST business by focusing on a couple of key customers for the TEMPEST services side of the business, which would provide a steady flow of business. The division will continue to provide products to existing customers. The Company relocated 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.

In order to assist funding operating activity, the Company’s CEO loaned an additional $710 thousand to the company during the first nine months 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 CEO with a balance of $2,094 thousand. 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 sheets as of November 30, 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.