Note 2 - Going Concern, Banking & Liquidity

6 Months Ended

Aug. 31, 2024

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 six-month period ending August 31, 2024, primarily due to insufficient revenues in the Company. The Company also had an increase in liquid assets for the six month period primarily as a result of proceeds from loans from the Company’s CEO, offset by negative cash flows from operations due to a 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 August 31, 2024, and February 29, 2024:

	August 31, 2024			February 29, 2024
Working capital	$	(1,310	)	$	(1,118	)
Liquid assets	$	258		$	169

The Company has intensified its marketing efforts for ruggedized displays, specialized displays, ruggedized cameras, and simulation products to boost revenue. New products in the ruggedized category have been developed and are currently under development, including a new ruggedized camera, HMI displays, and an upgraded 6.4-inch communication display for the U.S. Navy. The Company has received orders for all three products. Production of these three new products will commence in the next quarters. Additionally, the Company continues to streamline its operations and is focused on increasing revenues through other initiatives. These initiatives include enhancing sales and marketing efforts, targeting repeat business, and have hired an experienced Simulation Business Development Manager, increasing customer visits, participating in trade shows, and conducting email marketing campaigns to promote its product lines.

In order, to assist funding operating activity, the Company’s CEO loaned an additional $200,000 to the company during the first six months of fiscal year 2025. 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 $2,343,918. 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 August 31, 2024.

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.