operations. The plan is to further reduce expenses by closing the Tucker, Georgia facility as soon as the lease expires in 2022. There is no line of credit or other financing currently in place
other than the remaining PPP loans. 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.
Cash used in operations was $3.5 million in fiscal 2021 compared to providing $0.5 million in fiscal 2020. During fiscal
2021, the net profit from operations was $0.8 million and adjustments to reconcile net income to net cash were $2.3 million with $0.1 million in inventory reserves, and by $0.2 million in depreciation. Working capital related
accounts used $2.0 million in cash with contract assets using $1.5 million, customer deposits using $0.6 million, and accounts payable and accrued liabilities using $0.4 million, offset by an decrease in inventories of
$0.5 million and a decrease in prepaid of 0.1 million.
Investing activities provided $1.9 million in fiscal 2021. The
Company received $2.0 million in proceeds from the sale of a building partially offset by $60 thousand in capital expenditures. For fiscal 2020, $0.1 million was used in investing activities primary resulting from capital
expenditures.
Financing activities provided $1.0 million for the year ended February 28, 2021. The Company received
$2.0 million in PPP loans and $0.6 million from related party loans partially offset by the repayment of $1.6 million on notes payable to officers and directors. Financing activities provided $0.1 million for the year ended
February 29, 2020 resulting primarily from proceeds received on related party notes.
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 fiscal years 2021 and 2020, the Company did not repurchase any of the Companys stock. Under this program, an additional 490,186 shares remain
authorized to be repurchased by the Company at February 28, 2021.
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 as disclosed in 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 retained 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 was obligated to
repurchase the note for 80% of the remaining balance plus any accrued interest. This obligation has been fully satisfied as of February 28, 2021.
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 $1,026,850 at a six percent interest rate due on or before July 24, 2020
with Mr. Ordway. This obligation along with other obligations that were owed to the chief executive officer were fully satisfied as of February 28, 2021.
Contractual Obligations
Future
contractual maturities of long-term debt, future contractual obligations due under operating and finance leases, and other obligations at February 28, 2021 are as follows (in thousands):
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Payments due by period
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Total
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Less than
1 year
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1 3
years
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3 5
years
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More than
5 years
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PPP note obligations
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$
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1,120
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$
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$
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516
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$
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604
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$
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Finance lease obligations
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286
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104
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182
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Operating lease obligations
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1,232
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576
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466
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190
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15