Cash provided by operations was $0.5 million in fiscal 2020 and $0.2 million in
fiscal 2019. During fiscal 2020, the net loss from operations was $1.2 million and adjustments to reconcile net loss to net cash were $0.2 million with $0.1 million in inventory reserves, and by $0.2 million in depreciation.
Working capital related accounts generated $1.5 million in cash with customer deposits adding $1.2 million, accounts receivables adding $0.7 million, and accounts payable and accrued liabilities adding $0.4 million, offset by an
increase in inventories of $0.9 million.
During fiscal 2019, the net income from operations was $0.2 million and adjustments to
reconcile net income to net cash were $0.5 million to reduce inventory reserves, by $0.1 in investment gains offset by $0.3 million in depreciation. Changes in working capital generated $0.4 million, primarily due to a decrease in
inventories of $1.7 million, an increase in customer deposits of $0.6 million, offset by an increase in accounts receivable of $1.1 million, an increase in prepaid expenses of $0.4 million, and an decrease in accounts payable of
$0.3 million.
Investing activities used $0.1 million in fiscal 2020 and provided $0.4 million of cash in fiscal 2019. For
fiscal 2020, $0.1 million was used to purchase fixed assets. The Company is expected to invest an additional $0.2 million to upgrade the Cocoa, Florida and on equipment to support the business in fiscal 2021.
Investing activities in fiscal 2019 consisted of the sale of $1.3 million in investment securities, the purchase of $1.0 million of
investment securities, capital expenditures of $0.2 million and proceeds from the sale of equipment of $0.1 million.
Financing
activities provided $0.1 million for the year ended February 29, 2020 resulting primarily from proceeds received on related party notes.
Financing activities used $0.3 million for the year ended February 28, 2019. Proceeds from related party notes and from the line of
credit provided cash of $1 million offset by related payments on these obligations approximating $1.2 million along with $0.1 in margin payments.
The Company has a stock repurchase program, pursuant to which it has been authorized to repurchase up to 2,632,500 shares of the
Companys common stock in the open market. On January 20, 2014, the Board of Directors of the Company approved a one-time continuation of the stock repurchase program, and authorized the Company to
repurchase up to 1,500,000 additional shares of the Companys common stock, depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program. During the fiscal year ended
February 29, 2020, the Company did not repurchase any of the Companys stock and during the fiscal year ended February 28, 2019, the Company repurchased 8,858 shares of Company stock at an average price of $1.12 per share. Under this
program, an additional 490,186 shares remain authorized to be repurchased by the Company at February 29, 2020.
Transactions with Related
Parties, Contractual Obligations, and Commitments
The Company leases one building from the Companys CEO in Lexington, KY
(Honeyhill Properties) and one building owned by Ordway Properties LLC in Cocoa, Florida. The building in Lexington, KY serves as the manufacturing operations for the CRT division. The building in Cocoa, Florida is the new operational site for both
VDC Display Systems and AYON Cyber Security. See Note 9.
The Company also borrows money from the Chief Executive Officer on a short term
basis when funds are needed. See Note 4. On March 30, 2016 Video Display Corporation entered into an assignment with recourse of their note receivable from Z-Axis, Inc. with Ronald D. Ordway and
Jonathan R. Ordway for the sum of $912 thousand. The Company also retains the right to repurchase the note at any time for 80% of the outstanding principle balance. In the event of default by Z-Axis, the
Company is obligated to repurchase the note for 80% of the remaining balance plus any accrued interest.
In conjunction with the
acquisition of Jaco Displays, LLC, the Company borrowed $505,180 from Ronald D Ordway, CEO to fund the acquisition, and combined the amount borrowed with another $438,832 owed to Mr. Ordway in back rent along with $82,838 from previous
borrowings, and signed a promissory note for $1,026,850 at a six percent interest rate due on or before July 24, 2020 with Mr. Ordway.
Contractual Obligations
Future
contractual maturities of long-term debt, future contractual obligations due under operating leases, and other obligations at February 29, 2020 are as follows (in thousands):
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Payments due by period
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Total
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Less than
1 year
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|
1 3
years
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3 5
years
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|
|
More than
5 years
|
|
Notes payable obligations
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|
$
|
1,126
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|
|
$
|
1,126
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|
|
$
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|
|
|
$
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|
|
|
$
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|
|
Interest obligations on long-term debt (a)
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|
|
25
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|
|
|
25
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|
|
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|
|
|
|
|
|
Operating lease obligations
|
|
|
1,813
|
|
|
|
590
|
|
|
|
572
|
|
|
|
272
|
|
|
|
379
|
|
Warranty reserve obligations
|
|
|
51
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|
|
|
51
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Total
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|
$
|
3,015
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|
|
$
|
1,792
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|
|
$
|
572
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|
|
$
|
272
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|
|
$
|
379
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|
|
|
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|
|
|
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|
|
|
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|
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|
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14