Video Display Corporation and Subsidiaries
May 31, 2019
a new facility. These changes are projected to realize annual savings through reduced expenses. Management continues to explore options to monetize certain long-term assets of the business. If
additional and more permanent capital is required to fund the operations of the Company, no assurance can be given that the Company will be able to obtain the capital on terms favorable to the Company, if at all.
The ability of the Company to continue as a going concern is dependent upon the success of managements 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 managements plan create substantial doubt about the ability of the Company
to continue as a going concern.
Cash provided by operations for the three months ended May 31, 2019 was $0.3 million. The net
loss from operations was $0.3 million with changes in working capital providing $0.6 million, primarily due to a decrease in accounts receivable of $0.4 million, an increase in customer deposits of $0.4 million, a decrease in
inventory of $0.2 million offset by an increase in prepaid expenses of $0.4 million. Cash used by operations for the three months ended May 31, 2018 was $0.4 million.
Investing activities used $0.1 million. $0.1 million was used for the purchase of capital assets and investments for the three
months ended May 31, 2019. Investing activities provided cash of $0.4 million during the three months ended May 31, 2018 resulting primarily from proceeds received from the sale of investments net of purchases.
Financing activities used $23 thousand for the quarter ended May 31, 2019 related to the final debt payments made on the Teltron
Building. Financing activities provided $0.1 million for the three months ended May 31, 2018 resulting from proceeds received on related party loans partially offset by debt repayments.
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 on the open market, depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program.
For the quarter ending May 31, 2019, the Company did not purchase any shares of the Video Display Corporation stock. The Company
repurchased 8,858 shares at an average cost of $1.12 per share and for the quarter ending May 31, 2018. Under the Companys stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at
May 31, 2019.
Critical Accounting Estimates
Managements Discussion and Analysis of Financial Condition and Results of Operations are based upon the Companys interim condensed
consolidated financial statements. These interim condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These principles require the use of estimates and assumptions that affect amounts reported and disclosed in
the interim condensed consolidated financial statements and related notes. The accounting policies that may involve a higher degree of judgments, estimates, and complexity include reserves on inventories, revenue recognition, and the sufficiency of
the valuation reserve related to deferred tax assets. The Company uses the following methods and assumptions in determining its estimates:
Reserves on
Inventories
Reserves on inventories result in a charge to operations when the estimated net realizable value declines below cost.
Management regularly reviews the Companys investment in inventories for declines in value and establishes reserves when it is apparent that the expected net realizable value of the inventory falls below its carrying amount. Management reviews
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