ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State of Incorporation) |
(IRS Employer Identification No.) | |
(Address of principal executive offices) |
(Zip code) |
Title of each class |
Name of each exchange on which registered | |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☐ | Smaller reporting company | ||||
Emerging growth company |
ITEM NUMBER |
PAGE NUMBER |
|||||
Item 1. |
2 |
|||||
Item 1A. |
6 |
|||||
Item 1B. |
9 |
|||||
Item 2. |
9 |
|||||
Item 3. |
10 |
|||||
Item 4. |
10 |
|||||
Item 5. |
11 |
|||||
Item 6. |
11 |
|||||
Item 7. |
12 |
|||||
Item 7A. |
17 |
|||||
Item 8. |
18 |
|||||
Item 9. |
40 |
|||||
Item 9A(T). |
40 |
|||||
Item 9B. |
41 |
|||||
Item 10. |
42 |
|||||
Item 11. |
42 |
|||||
Item 12. |
42 |
|||||
Item 13. |
42 |
|||||
Item 14. |
42 |
|||||
Item 15. |
43 |
|||||
44 |
• | Dome Aircraft Simulator Display Systems |
• | Multi-Faceted Aircraft Simulator Display Systems |
• | Video Walls for Broadcast and Control Centers |
• | Rugged Video Walls for Combat Information Center (CIC) |
• | Rugged Flat Panel Displays and Computers |
• | TEMPEST Products |
• | TEMPEST Services |
• | Projector and Monitor Upgrades |
• | Projection Screens |
February 28, 2022 |
February 28, 2021 |
|||||||
Working capital |
$ |
509 |
$ | 3,601 | ||||
Liquid assets |
$ |
245 |
$ | 293 |
• | 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. |
• | 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. |
• | 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 supply chain issues |
• | Tariffs and governmental trade policies. |
Location |
Square Feet |
Lease Expires |
||||||
Tucker, Georgia |
59,000 | March 31, 2022 | ||||||
Lexington, Kentucky |
40,000 | June 30, 2022 | ||||||
Cocoa, Florida |
34,500 | February 19, 2025 |
For Fiscal Years Ended |
||||||||||||||||
February 28, 2022 |
February 28, 2021 |
|||||||||||||||
Quarter Ended |
High |
Low |
High |
Low |
||||||||||||
May |
2.70 | 1.13 | 1.19 | .90 | ||||||||||||
August |
1.40 | 1.12 | 2.07 | .97 | ||||||||||||
November |
1.22 | 1.02 | 2.05 | 1.12 | ||||||||||||
February |
1.27 | .83 | 3.10 | 1.00 |
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 |
• | Simulation and Training Products |
• | Cyber Secure Products |
• | Data Display CRTs |
• | Other Computer Products |
2022 |
2021 |
|||||||||||||||
Amount |
% |
Amount |
% |
|||||||||||||
Net Sales |
||||||||||||||||
Simulation and Training |
4,088 |
58.4 | % | 8,143 |
65.0 | % | ||||||||||
Data Display CRTs |
992 |
14.2 | 1,496 |
11.9 | ||||||||||||
Cyber Secure Products |
612 |
8.7 | 1,558 |
12.4 | ||||||||||||
Other Computer Products |
1,309 |
18.7 | 1,344 |
10.7 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net sales |
7,001 |
100.0 | 12,541 |
100.0 | ||||||||||||
|
|
|
|
|
|
|
|
Costs and expenses |
||||||||||||||||
Cost of goods sold |
7,324 |
103.7 | % | 9,925 |
79.2 | % | ||||||||||
Selling and delivery |
555 |
7.9 | 905 |
7.3 | ||||||||||||
General and administrative |
3,753 |
53.6 | 3,989 |
31.8 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
11,632 |
165.2 | 14,819 |
118.3 | |||||||||||||
Loss from operations |
(4,631 |
) |
(65.2 | ) | (2,278 |
) |
(18.3 | ) | ||||||||
Interest expense, net |
(25 |
) |
(0.4 | ) | (4 |
) |
(0.0 | ) | ||||||||
Employee retention credit income |
796 |
11.4 | — |
0.0 | ||||||||||||
Gain on extinguishment of PPP loans |
1,084 |
15.5 | 988 |
7.9 | ||||||||||||
Gain on disposal of assets |
— |
0.0 | 1,724 |
13.8 | ||||||||||||
Other income, net |
216 |
3.1 | 415 |
3.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(Loss) income before income taxes |
(2,560 |
) |
(35.6 | ) | 845 |
6.8 | ||||||||||
Income tax expense |
— |
0.0 | 33 |
0.3 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net (loss) income |
(2,560 |
) |
(35.6 | ) | 812 |
6.5 | ||||||||||
|
|
|
|
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Working capital |
$ |
509 |
$ | 3,601 | ||||
Liquid assets |
$ |
245 |
$ | 293 |
Payments due by period |
||||||||||||||||||||
Total |
Less than 1 year |
1 – 3 years |
3 – 5 years |
More than 5 years |
||||||||||||||||
Finance lease obligations |
$ | 181 | $ | 104 | $ | 77 | $ | — | $ | — | ||||||||||
Operating lease obligations |
656 | 276 | 380 | — | — | |||||||||||||||
Note payable -related party |
458 | 458 | — | — | — | |||||||||||||||
Warranty reserve obligations |
24 | 24 | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total |
$ | 1,319 | $ | 862 | $ | 457 | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
19 |
||||
21 |
||||
23 |
||||
24 |
||||
25 |
||||
26 |
February 28, 2022 |
February 28, 2021 |
|||||||
Assets |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ |
$ | ||||||
Accounts receivable, less allowance for bad debts of $ |
||||||||
Employee retention credit refund receivable |
||||||||
Inventories, net |
||||||||
Contract assets |
||||||||
Prepaid expenses and other current assets |
||||||||
|
|
|
|
|||||
Total current assets |
||||||||
|
|
|
|
|||||
Property, plant and equipment: |
||||||||
Buildings |
||||||||
Construction in progress |
||||||||
Machinery and equipment |
||||||||
|
|
|
|
|||||
Accumulated depreciation |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Net property, plant and equipment |
||||||||
|
|
|
|
|||||
Right of use assets under operating leases |
||||||||
Intangible assets, net |
||||||||
Other noncurrent assets |
||||||||
|
|
|
|
|||||
Total assets |
$ |
$ | ||||||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Liabilities and Shareholders’ Equity |
||||||||
Current liabilities |
||||||||
Accounts payable (including related party payables of $ |
$ |
$ | ||||||
Accrued liabilities |
||||||||
Contract liabilities |
||||||||
Current maturities of financing lease obligations |
||||||||
Current operating lease liabilities |
||||||||
Note payable |
— |
|||||||
Notes payable to officers and directors, current (Note 5) |
||||||||
|
|
|
|
|||||
Total current liabilities |
||||||||
Long-term operating lease liabilities |
||||||||
Finance lease obligations less current maturities |
||||||||
PPP related loans, non-current |
||||||||
|
|
|
|
|||||
Total liabilities |
||||||||
|
|
|
|
|||||
Shareholders’ Equity |
||||||||
Preferred stock, |
||||||||
Common stock, and 2021 |
||||||||
Additional paid-in capital |
||||||||
Retained earnings |
||||||||
Treasury stock, |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Total shareholders’ equity |
||||||||
|
|
|
|
|||||
Total liabilities and shareholders’ equity |
$ |
$ | ||||||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Net sales |
$ |
$ | ||||||
Cost of goods sold |
||||||||
Gross (loss) profit |
( |
) |
||||||
Operating expenses |
||||||||
Selling and delivery |
||||||||
General and administrative |
||||||||
Operating loss |
( |
) |
( |
) | ||||
Other income (expense) |
||||||||
Interest expense, net |
( |
) |
( |
) | ||||
Investment gain |
— |
|||||||
Gain on extinguishment of PPP loans |
||||||||
Employee retention credit income |
||||||||
Gain on disposal of assets |
— |
|||||||
Other income, net |
||||||||
Total other income, net |
||||||||
(Loss) income before income taxes |
( |
) |
||||||
Income tax expense |
— |
|||||||
Net (loss) income |
$ |
( |
) |
$ | ||||
Net (loss) income per share-basic |
$ |
( |
) |
$ | ||||
Net (loss) income per share-diluted |
$ |
( |
) |
$ | ||||
Average shares outstanding – basic |
||||||||
Average shares outstanding – diluted |
||||||||
Common Shares* |
Share Amount |
Additional Paid-in Capital |
Retained Earnings |
Treasury Stock |
Total Shareholders’ Equity |
|||||||||||||||||||
Balance, February 29, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Net income |
— | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, February 28, 2021 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance, February 28, 2022 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
* |
Common Shares are shown net of Treasury Shares |
February 28, 2022 |
February 28, 2021 |
|||||||
Operating Activities |
||||||||
Net (loss) income |
$ |
( |
) |
$ | ||||
Adjustments to reconcile net (loss) income to net cash used in operating activities: |
||||||||
Depreciation expense |
||||||||
Amortization of intangible assets |
||||||||
Provision for doubtful accounts |
||||||||
Inventory related charges |
||||||||
Gain on extinguishment of PPP loans |
( |
) |
( |
) | ||||
Gain on disposal of assets |
( |
) | ||||||
Gain on sale of investments |
( |
) | ||||||
Other, net |
( |
) |
||||||
Changes in working capital items: |
||||||||
Accounts receivable |
( |
) | ||||||
Employee retention credit refund receivable |
( |
) |
||||||
Inventories |
( |
) |
||||||
Prepaid expenses and other assets |
||||||||
Accounts payable and accrued liabilities |
( |
) | ||||||
Contract assets |
( |
) | ||||||
Contract liabilities |
( |
) | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Investing Activities |
||||||||
Capital expenditures |
( |
) |
( |
) | ||||
Purchases of investments |
( |
) | ||||||
Proceeds from sale of assets |
||||||||
Proceeds from sale of investments |
||||||||
|
|
|
|
|||||
Net cash (used in) provided by investing activities |
( |
) |
||||||
|
|
|
|
|||||
Financing Activities |
||||||||
Proceeds from related party loans |
||||||||
Proceeds from PPP related loans |
||||||||
Repayments of lease financing |
( |
) |
( |
) | ||||
Repayments of notes payable |
( |
) |
||||||
Change on marginal float |
||||||||
Repayments of notes payable to officers and directors |
( |
) | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
Net change in cash and cash equivalents |
( |
) |
( |
) | ||||
Cash and cash equivalents, beginning of year |
||||||||
|
|
|
|
|||||
Cash and cash equivalents, end of year |
||||||||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Working capital |
$ |
$ | |
|||||
Liquid assets |
$ |
$ |
2022 |
2021 |
|||||||
Simulation and training (including video walls) |
$ | $ | ||||||
Cyber security |
||||||||
Data displays |
||||||||
Other computer products (keyboards) |
||||||||
|
|
|
|
|||||
Total revenue |
$ | $ | ||||||
|
|
|
|
|
|
|
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. |
Description |
Balance at Beginning of Period |
Additions: Charged to Costs and Expenses |
Deductions |
Balance at End of Period |
||||||||||||
February 28, 2022 |
$ | |
$ | $ | ( |
) | |
$ | ||||||||
February 28, 2021 |
$ | $ | |
$ | ( |
) | |
$ | |
Net Income (Loss) |
Average Shares Outstanding |
Net (Loss) Income Per Share |
||||||||||
2022 |
||||||||||||
Basic |
( |
) | ( |
) | ||||||||
Effect of dilution: |
||||||||||||
Options |
— | — | ||||||||||
|
|
|
|
|
|
|||||||
Diluted loss per share |
( |
) | ( |
) | ||||||||
|
|
|
|
|
|
|||||||
2021 |
||||||||||||
Basic |
||||||||||||
Effect of dilution: |
||||||||||||
Options |
||||||||||||
|
|
|
|
|
|
|||||||
Diluted earnings per share |
||||||||||||
|
|
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Raw materials |
$ |
$ | ||||||
Work-in-process |
||||||||
Finished goods |
||||||||
|
|
|
|
|||||
Reserves for obsolescence |
— |
( |
) | |||||
$ |
$ | |||||||
|
|
|
|
Description |
Balance at Beginning of Period |
Additions: Charged to Costs and Expenses |
Deductions |
Balance at End of Period |
||||||||||||
February 28, 2022 |
$ | $ | $ | ( |
) | |||||||||||
February 28, 2021 |
$ | $ | $ | ( |
) | $ |
February 28, 2022 |
February 28, 2021 |
|||||||
Costs incurred to date on uncompleted contracts |
$ |
$ |
||||||
Estimated earnings recognized to date on these contracts |
||||||||
|
|
|
|
|||||
Total costs and estimated gross profit earned |
||||||||
Less billings to date |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Contract liabilities, net |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Contract assets |
$ |
$ |
||||||
Contract liabilities |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Contract liabilities, net |
$ |
( |
) |
$ |
( |
) | ||
|
|
|
|
2022 |
2021 |
|||||||
Balance at beginning of year |
||||||||
Change in provision based on current year sales activity |
( |
) |
||||||
Warranty costs incurred |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Balance at end of year |
||||||||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Accrued compensation and benefits |
$ |
$ | ||||||
Accrued payroll taxes |
||||||||
Accrued commissions |
||||||||
Accrued property taxes |
||||||||
Accrued warranty |
||||||||
Accrued other |
||||||||
|
|
|
|
|||||
$ |
$ | |||||||
|
|
|
|
Number of Options (in thousands) |
Average Exercise Price Per Share |
|||||||
Outstanding at February 28, 2020 |
$ | |||||||
Granted |
||||||||
Forfeited or expired |
||||||||
|
|
|
|
|||||
Outstanding at February 28, 2021 |
$ | |||||||
Granted |
||||||||
Forfeited or expired |
||||||||
|
|
|
|
|||||
Outstanding at February 28, 2022 |
$ | |||||||
|
|
|
|
|
|
|
|
|
Options exercisable |
||||||||
February 28, 2021 |
$ | |||||||
February 28, 202 2 |
$ |
Options Outstanding |
Options Exercisable |
|||||||||||||||||||||
Range of Exercise Prices |
Number Outstanding at February 28, 2022 (in thousands) |
Weighted Average Remaining Contractual Life (in years) |
Weighted Average Exercise Price |
Number Exercisable at February 28, 2022 (in thousands) |
Weighted Average Exercise Price |
|||||||||||||||||
$ | $ | $ | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
||||||||
February 28, 2022 |
February 28, 2021 |
|||||||
Statutory U.S. federal income tax rate |
$ |
( |
) |
$ | ( |
) | ||
State income taxes, net of federal benefit |
( |
) |
( |
) | ||||
Valuation allowance |
||||||||
Other |
||||||||
|
|
|
|
|||||
Taxes at effective income tax rate |
$ |
$ | ||||||
|
|
|
|
February 28, 2022 |
February 28, 2021 |
|||||||
Deferred tax assets (liabilities): |
||||||||
Federal net operating loss carry-forward |
$ |
$ | ||||||
State net operating loss carry-forward |
||||||||
Federal tax credit carry-forward |
||||||||
Inventory reserves |
||||||||
Uniform capitalization costs |
||||||||
Foreign tax credit carry-forward |
||||||||
Accrued liabilities |
||||||||
Basis of disposal |
( |
) | ||||||
Right of use assets |
( |
) |
( |
) | ||||
Lease liabilities |
||||||||
Basis difference of property, plant and equipment |
( |
) |
( |
) | ||||
Allowance for doubtful accounts |
||||||||
Amortization of intangibles |
||||||||
Other |
( |
) |
( |
) | ||||
Valuation allowance |
( |
) |
( |
) | ||||
Net deferred tax asset s |
$ |
$ | ||||||
February 28, 2022 |
||||
Operating lease right-of-use |
$ | |||
Current portion of operating lease liabilities |
$ | |||
Noncurrent portion of operating lease liabilities |
||||
Total operating lease liabilities |
$ | |||
February 28, 2022 |
||||
Weighted average remaining lease term |
||||
Weighted average discount rate |
% |
Fiscal Year |
Amount |
|||
2023 |
$ | |||
2024 |
||||
2025 |
||||
Total operating lease payments |
$ | |
||
Less imputed interest |
( |
) | ||
Total operating lease liabilities |
$ | |||
Fiscal Year |
Amount |
|||
2023 |
$ | |||
$ | ||||
February 28, 2022 |
||||
Financing lease right-of-use |
$ | |||
Current portion of financing lease liabilities |
$ | |||
Noncurrent portion of financing lease liabilities |
||||
Total financing lease liabilities |
$ | |||
Fiscal Year |
Amount |
|||
2023 |
$ | |||
2024 |
||||
Total finance lease payments |
$ | |||
Less imputed interest |
( |
) | ||
Total finance lease liabilities |
$ | |||
Fiscal Year |
Amount |
|||
2023 |
$ | |||
2024 |
||||
2025 |
||||
$ |
Fiscal Year Ended (in thousands) |
||||||||
February 28, 2022 |
February 28, 2021 |
|||||||
Cash paid for: |
||||||||
Interest |
$ |
$ | ||||||
Non-cash activity: |
||||||||
Note receivable paid directly to officer |
$ |
$ | ||||||
Note payable to officer |
$ |
$ | ||||||
Forgiveness of accrued interest owed on related party note to officer (Note 5 ) |
$ |
$ | ||||||
Forgiveness of PPP loans (Note 4 ) |
$ |
$ | |
|||||
Equipment finance lease (Note 10 ) |
$ |
$ | ||||||
Imputed interest expense |
$ |
$ | ||||||
Imputed interest income |
$ |
$ | ||||||
2022 |
||||||||||||||||
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
Net sales |
$ | $ | $ | $ | ||||||||||||
Gross profit (loss) |
( |
) | ( |
) | ||||||||||||
Net income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
Basic net income (loss) per share |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) | ||||||
Diluted net income (loss) per share |
$ | ( |
) | $ | $ | ( |
) | $ | ( |
) |
2021 |
||||||||||||||||
First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
(in thousands, except per share amounts) |
||||||||||||||||
Net sales |
$ | $ | $ | $ | ||||||||||||
Gross profit |
||||||||||||||||
Net income (loss) |
( |
) | ( |
) | ( |
) | ||||||||||
Basic net income (loss) per share |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) | ||||||
Diluted net income (loss) per share |
$ | ( |
) | $ | ( |
) | $ | $ | ( |
) |
(a) | The following documents are filed as part of this Report: |
(b) | Exhibits |
Date: May 31, 2022 | VIDEO DISPLAY CORPORATION | |||||
By: | /s/ Ronald D. Ordway | |||||
Ronald D. Ordway | ||||||
Chairman of the Board and | ||||||
Chief Executive Officer |
Signature -Name |
Capacity |
Date | ||
/s/ Ronald D. Ordway |
Chief Executive Officer, | May 31, 2022 | ||
Ronald D. Ordway | Treasurer and Director | |||
(Principal Executive Officer) | ||||
/s/ Gregory L. Osborn |
Chief Financial Officer and Director | May 31, 2022 | ||
Gregory L. Osborn | (Principal Financial Officer) |