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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended May 31, 2023.

~~For the Quarterly Period Ended November 30, 2022.~~ or

☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From _________________ to ________________________

☐Commission ~~Transition~~File ~~Report~~Number ~~Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~0-13394

~~For~~VIDEO ~~the~~DISPLAY ~~Transition Period From _________________ to ________________________~~ CORPORATION

~~0-13394~~(Exact name of registrant as specified on its charter)

VIDEO DISPLAY CORPORATION

Georgia

58-1217564

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~(Exact~~5155 ~~name~~KING ofSTREET, ~~registrant~~Cocoa, asFlorida ~~specified on its charter)~~ 32926

GEORGIA		58-1217564
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

(Address of principal executive offices)

~~5155 KING STREET, COCOA, FLORIDA 32926~~ 800-241-5005

(~~Address~~Registrant’s oftelephone ~~principal~~number ~~executive~~including ~~offices)~~area code)

~~800-241-5005~~Securities registered pursuant to Section 12(b) of the Act:

Title of each class Trading Symbol(~~Registrant’~~s) ~~telephone~~Name ~~number~~of ~~including~~each ~~area~~exchange ~~code)~~on which registered Common Stock, no par value VIDE OTCMKTS

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check mark whether the registrant (1) has filed all reports required to be filed by Section 1213 or 15(bd) of the Securities Exchange Act: of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

~~Title~~Indicate ofby ~~each~~check ~~class~~mark ~~Trading~~whether ~~Symbol~~the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (s§232.405 of this chapter) ~~Name~~during ofthe ~~each~~preceding ~~exchange~~12 onmonths ~~which~~(or ~~registered~~for ~~Common~~such ~~Stock,~~shorter noperiod ~~par~~that ~~value~~the ~~VIDE~~registrant ~~OTCMKTS~~was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant ~~(1) has~~is ~~filed~~a ~~all~~large ~~reports~~accelerated ~~required~~filer, toan beaccelerated ~~filed~~filer, bya ~~section~~non-accelerated 13filer, ora ~~15(d)~~smaller ofreporting ~~the~~company, ~~Securities~~or ~~Exchange~~an ~~Act~~emerging ofgrowth ~~1934~~company. ~~during~~See the ~~preceding~~definitions 12of ~~months~~“large ~~(or~~accelerated ~~for~~filer,” ~~such~~“accelerated ~~shorter~~filer,” ~~period~~“smaller ~~that~~reporting ~~the registrant was required to file such reports)~~company,” and ~~(2) has~~“emerging ~~been~~growth ~~subject~~company” toin ~~such~~Rule ~~filing~~12b-2 ~~requirements~~of ~~for~~ the ~~past~~Exchange ~~90 days. Yes ☒ No ☐~~ Act

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~☐ ~~whether~~Accelerated ~~the~~filer ~~registrant~~☐ ~~has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S~~Non-Taccelerated ~~(§232.405~~filer of☐ ~~this~~Smaller ~~chapter)~~reporting ~~during~~company ~~the~~☑ ~~preceding~~Emerging 12growth ~~months~~company ~~(or for such shorter period that the registrant was required to submit such files). Yes ☒ No~~ ☐

~~Indicate~~If byan ~~check~~emerging ~~mark~~growth ~~whether the registrant is a large accelerated filer~~company, anindicate ~~accelerated~~by ~~filer,~~check amark ~~non-accelerated~~if ~~filer,~~the ~~smaller~~registrant ~~reporting~~has ~~company,~~elected ornot anto ~~emerging~~use ~~growth company. See~~ the ~~definitions~~extended oftransition ~~“large~~period ~~accelerated~~for ~~filer,”~~complying ~~“accelerated~~with ~~filer,”~~any ~~“smaller~~new ~~reporting~~or ~~company,”~~revised ~~and~~financial ~~“emerging~~accounting ~~growth~~standards ~~company”~~provided inpursuant ~~Rule~~to ~~12b-2~~Section 13(a) of the Exchange Act. ☐

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ☐mark ~~Accelerated~~whether ~~filer~~the ☐registrant ~~Non-accelerated~~is ~~filer~~a ☐shell ~~Smaller~~company ~~reporting~~(as ~~company~~defined ☒in ~~Emerging~~Rule ~~growth~~12b-2 ~~company~~of the Exchange Act). Yes ☐

IfAs anof ~~emerging~~May ~~growth~~31, ~~company~~2023, ~~indicate by check mark if~~ the registrant ~~has~~had ~~elected~~5,878,290 ~~not~~shares ~~to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)~~ of ~~the~~Common ~~Exchange~~Stock ~~Act~~outstanding. ☐

~~Indicate~~Table of Contents

~~12b-2~~Video Display Corporation and Subsidiaries

~~No ☒~~ Index

As of November 30, 2022, the registrant had 5,878,290 shares of Common Stock outstanding.

PART I.	FINANCIAL INFORMATION		Page

	Item 1.	Financial Statements.

		Interim Condensed Consolidated Balance Sheets – May 31, 2023 (unaudited) and February 28, 2023	3

		Interim Condensed Consolidated Statements of Operations - Three months ended May 31, 2023 and 2022 (unaudited)	5

		Interim Condensed Consolidated Statements of Shareholders’ Equity (Deficit)- Three months ended May 31, 2023 and 2022 (unaudited)	6

		Interim Condensed Consolidated Statements of Cash Flows – Three months ended May 31, 2023 and 2022 (unaudited)	7

		Notes to Interim Condensed Consolidated Financial Statements - (unaudited)	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13

	Item 3.	Quantitative and Qualitative Disclosure About Market Risk.	19

	Item 4.	Controls and Procedures.	19

PART II.	OTHER INFORMATION

	Item 1.	Legal Proceedings.	20

	Item 1A.	Risk Factors.	20

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	20

	Item 3.	Defaults upon Senior Securities.	20

	Item 4.	Submission of Matters to a Vote of Security Holders.	20

	Item 5.	Other Information.	20

	Item 6.	Exhibits.	20

	SIGNATURES		21

	31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Video Display Corporation and Subsidiaries~~ 2

~~Index~~Table of Contents

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Interim Condensed Consolidated Balance Sheets – November 30, 2022 (unaudited) and February 28, 2022		1
		Interim Condensed Consolidated Statements of Operations - Three and nine months ended November 30, 2022 and 2021 (unaudited)		3
		Interim Condensed Consolidated Statements of Shareholders’ Equity - Three and nine months ended November 30, 2022 and 2021 (unaudited)		4
		Interim Condensed Consolidated Statements of Cash Flows – Nine months ended November 30, 2022 and 2021 (unaudited)		5
		Notes to Interim Condensed Consolidated Financial Statements - (unaudited)		6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 3.	Quantitative and Qualitative Disclosure About Market Risk		19
	Item 4.	Controls and Procedures		19
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings		II-1
	Item 1A.	Risk Factors		II-1
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		II-1
	Item 3.	Defaults upon Senior Securities		II-1
	Item 4.	Submission of Matters to a Vote of Security Holders		II-1
	Item 5.	Other Information		II-1
	Item 6.	Exhibits		II-1
	SIGNATURES

ITEM 1 – FINANCIAL STATEMENTS

31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Video Display Corporation and Subsidiaries

~~Table~~Interim ofCondensed ~~Contents~~Consolidated Balance Sheets (unaudited)

~~ITEM 1~~(in ~~– FINANCIAL STATEMENTS~~ thousands)

Video Display Corporation and Subsidiaries

	May 31,			February 28,
	2023			2023
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	238		$	400
Accounts receivable, less allowance for doubtful accounts of $6 and $6		552			829
Inventories, net		2,802			2,458
Contract assets		115			280
Prepaid expenses and other current assets		273			206
Total current assets		3,980			4,173

Property, plant, and equipment
Buildings		789			789
Construction in progress		9			9
Machinery and equipment		5,384			5,384
		6,182			6,182
Accumulated depreciation		(5,533	)		(5,479	)
Net property, plant, and equipment		649			703

Right of use assets under operating leases		363			482
Other noncurrent assets		2			2
Total assets	$	4,994		$	5,360

~~Interim~~The ~~Condensed~~accompanying ~~Consolidated~~notes ~~Balance~~are ~~Sheets~~an ~~(unaudited)~~integral part of these interim condensed consolidated statements.

~~(in thousands)~~ 3

	November 30, 2022			February 28, 2022
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	283		$	245
Accounts receivable, less allowance for doubtful accounts of $3 and $3		726			390
Employee retention credit refund receivable		463			796
Inventories, net		2,787			3,342
Contract assets		691			444
Prepaid expenses and other current assets		368			297
Total current assets		5,318			5,514
Property, plant, and equipment
Buildings		789			778
Machinery and equipment		5,397			5,359
		6,186			6,137
Accumulated depreciation		(5,423	)		(5,247	)
Net property, plant, and equipment		763			890
Right of use assets under operating leases		599			592
Intangible assets, net		21			118
Other noncurrent assets		2			2
Total assets	$	6,703		$	7,116

Table of Contents

~~The~~Video ~~accompanying~~Display ~~notes~~Corporation ~~are~~and ~~an integral part of these interim condensed consolidated statements.~~ Subsidiaries

1Interim Condensed Consolidated Balance Sheets (unaudited) (continued)

~~Table~~(in ~~of Contents~~thousands)

Video Display Corporation and Subsidiaries

	May 31,			February 28,
	2023			2023
	(unaudited)
Liabilities and Shareholders’ Equity (Deficit)
Current liabilities
Accounts payable (including related party payables of $664 and $616; Note 5)	$	2,133		$	1,629
Accrued liabilities		1,132			1,096
Contract liabilities		428			974
Note payable to officers and directors, current (Note 5)		1,464			1,384
Current maturities of financing lease obligations		50			74
Current operating lease liabilities		236			313
Total current liabilities		5,443			5,470
Long-term operating lease liabilities		127			169
Total liabilities		5,570			5,639


Shareholders’ Equity (Deficit)
Preferred stock, no par value – 10,000 shares authorized; none issued and outstanding		-			-
Common stock, no par value – 50,000 shares authorized; 9,732 issued and 5,878 outstanding at May 31, 2023, and February 28, 2023		7,293			7,293
Additional paid-in capital		281			281
Retained earnings		8,132			8,429
Treasury stock, shares at cost; 3,854 at May 31, 2023 and February 28, 2023		(16,282	)		(16,282	)
Total shareholders’ equity (deficit)		(576	)		(279	)
Total liabilities and shareholders’ equity (deficit)	$	4,994		$	5,360

~~Interim~~The ~~Condensed~~accompanying ~~Consolidated~~notes ~~Balance~~are ~~Sheets~~an ~~(unaudited)~~integral ~~(continued)~~part of these interim condensed consolidated statements.

~~(in thousands)~~ 4

	November 30, 2022			February 28, 2022
	(unaudited)
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	1,458		$	1,465
Accrued liabilities		1,079			855
Contract liabilities		1,414			1,872
Note payable to officers and directors, current (Note 6)		1,284			458
Current maturities of financing lease obligations		98			98
Current operating lease liabilities		388			257
Total current liabilities		5,721			5,005
Finance lease obligations less current maturities		—			64
Long-term operating lease liabilities		211			333
Total liabilities		5,932			5,402
Shareholders’ Equity
Preferred stock, no par value – 10,000 shares authorized; none issued and outstanding		—			—
Common stock, no par value – 50,000 shares authorized; 9,732 issued and 5,878 outstanding at November 30, 2022, and February 28, 2022		7,293			7,293
Additional paid-in capital		281			281
Retained earnings		9,479			10,422
Treasury stock, shares at cost;3,854 at November 30, 2022 and February 28, 2022		(16,282	)		(16,282	)
Total shareholders’ equity		771			1,714
Total liabilities and shareholders’ equity	$	6,703		$	7,116

Table of Contents

~~The~~Video ~~accompanying~~Display ~~notes~~Corporation ~~are~~and ~~an integral part of these interim condensed consolidated statements.~~ Subsidiaries

2Interim Condensed Consolidated Statements of Operations (unaudited)

~~Table~~(in ofthousands, ~~Contents~~except per share data)

Video Display Corporation and Subsidiaries

	Three Months Ended May 31,
	2023			2022
Net sales	$	2,560		$	2,841
Cost of goods sold		1,891			2,130
Gross profit		669			711

Operating expenses
Selling and delivery		84			149
General and administrative		892			870
		976			1,019
Operating loss		(307	)		(308	)

Other income (expense)
Interest expense, net		(2	)		(5	)
Gain on disposal of equipment, net		10			3
Other, net		2			15
		10			13
Loss before income taxes		(297	)		(295	)
Income tax expense		-			-
Net loss	$	(297	)	$	(295	)

Net loss per share:
Net loss per share-basic	$	(0.05	)	$	(0.05	)
Net loss per share-diluted	$	(0.05	)	$	(0.05	)

Basic weighted average shares outstanding		5,878			5,878
Diluted weighted average shares outstanding		5,878			5,878

~~Interim~~The ~~Condensed~~accompanying ~~Consolidated~~notes ~~Statements~~are an integral part of ~~Operations~~these ~~(unaudited)~~interim condensed consolidated statements.

~~(in thousands, except per share data)~~ 5

	Three Months Ended November 30,						Nine Months Ended November 30,
	2022			2021			2022			2021
Net sales	$	1,687		$	1,616		$	6,494		$	5,377
Cost of goods sold		1,392			2,171			4,980			5,514
Gross profit (loss)		295			(555	)		1,514			(137	)
Operating expenses
Selling and delivery		92			126			372			408
General and administrative		885			978			2,598			2,873
		977			1,104			2,970			3,281
Operating loss		(682	)		(1,659	)		(1,456	)		(3,418	)
Other income (expense)
Interest income (expense), net		(4	)		(6	)		(13	)		(20	)
Employee retention credit income					796						796
Gain on sale of equipment, net		—			—			3			—
Gain on extinguishment of PPP loans		—			—			—			1,084
Other, net		(27	)		63			523			171
		(31	)		853			513			2,031
Income (loss) before income taxes		(713	)		(806	)		(943	)		(1,387	)
Income tax expense		—			—			—			—
Net income (loss)	$	(713	)	$	(806	)	$	(943	)	$	(1,387	)
Net income (loss) per share - basic	$	(0.12	)	$	(0.14	)	$	(0.16	)	$	(0.24	)
Net income (loss) per share - diluted	$	(0.12	)	$	(0.14	)	$	(0.16	)	$	(0.24	)
Basic weighted average shares outstanding		5,878			5,878			5,878			5,878
Diluted weighted average shares outstanding		5,878			5,878			5,878			5,878

Table of Contents

~~The~~Video ~~accompanying~~Display ~~notes~~Corporation ~~are~~and ~~an integral part of these interim condensed consolidated statements.~~ Subsidiaries

3Interim Condensed Consolidated Statements of Shareholders’ Equity

~~Table~~Three ofMonths ~~Contents~~Ended May 31, 2023 and 2022 (unaudited)

~~Video~~(in ~~Display Corporation and Subsidiaries~~ thousands)

Interim Condensed Consolidated Statements of Shareholders’ Equity

	Common Shares*		Share Amount		Additional Paid-in Capital		Retained Earnings			Treasury Stock			Total Shareholders’ Equity (Deficit)

Balance, March 1, 2023		5,878	$	7,293	$	281	$	8,429		$	(16,282	)	$	(279	)

Net loss		-		-		-		(297	)		-			(297	)
Balance, May 31, 2023 (unaudited)		5,878	$	7,293	$	281	$	8,132		$	(16,282	)	$	(576	)

Three and Nine Months Ended November 30, 2022 and 2021 (unaudited)

	Common Shares*		Share Amount		Additional Paid-in Capital		Retained Earnings			Treasury Stock			Total Shareholders’ Equity (Deficit)

Balance, March 1, 2022		5,878	$	7,293	$	281	$	10,422		$	(16,282	)	$	1,714

Net loss		-		-		-		(295	)		-			(295	)
Balance, May 31, 2022 (unaudited)		5,878	$	7,293	$	281	$	10,127		$	(16,282	)	$	1,419

~~(in~~* ~~thousands)~~Common Shares are shown net of Treasury Shares

	Common Shares*		Share Amount		Additional Paid-in Capital		Retained Earnings			Treasury Stock			Total Shareholders’ Equity
For the Three Months Ended November 30, 2022
Balance, August 31, 2022 (unaudited)		5,878	$	7,293	$	281	$	10,192		$	(16,282	)	$	1,484
Net loss		—		—		—		(713	)		—			(713	)
Balance, November 30, 2022 (unaudited)		5,878	$	7,293	$	281	$	9,479		$	(16,282	)	$	771
For the Nine Months Ended November 30, 2022
Balance, February 28, 2022 (audited)		5,878	$	7,293	$	281	$	10,422		$	(16,282	)	$	1,714
Net loss		—		—		—		(943	)		—			(943	)
Balance, November 30, 2022 (unaudited)		5,878	$	7,293	$	281	$	9,479		$	(16,282	)	$	771
For the Three Months Ended November 30, 2021
Balance, August 31, 2021 (unaudited)		5,878	$	7,293	$	281	$	12,401		$	(16,282	)	$	3,693
Net loss		—		—		—		(806	)		—			(806	)
Balance, November 30, 2021 (unaudited)		5,878	$	7,293	$	281	$	11,595		$	(16,282	)	$	2,887
For the Nine Months Ended November 30, 2021
Balance, February 28, 2021 (audited)		5,878	$	7,293	$	281	$	12,982		$	(16,282	)	$	4,274
Net loss		—		—		—		(1,387	)		—			(1,387	)
Balance, November 30, 2021 (unaudited)		5,878	$	7,293	$	281	$	11,595		$	(16,282	)	$	2,887

The accompanying notes are an integral part of these interim condensed consolidated statements.

* Common shares are shown net of Treasury Shares6

~~The~~Table ~~accompanying notes are an integral part~~ of ~~these interim condensed consolidated statements.~~ Contents

4Video Display Corporation and Subsidiaries

~~Table~~Interim Condensed Consolidated Statements of ~~Contents~~Cash Flows (unaudited)

~~Video~~(in ~~Display Corporation and Subsidiaries~~ thousands)

Interim Condensed Consolidated Statements of Cash Flows (unaudited)

	Three Months Ended May 31,
	2023			2022
Operating Activities
Net loss	$	(297	)	$	(295	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		54			67
Amortization of intangible assets		-			32
Non cash lease cost		119			99
Gain on disposal of equipment		(10	)		(3	)
Other		-			5
Changes in working capital items:
Accounts receivable		277			(683	)
Inventories		(344	)		359
Prepaid expenses and other assets		(67	)		93
Contract assets		165			(792	)
Employee retention credit refund receivable		-			185
Operating lease liabilities		(119	)		(97	)
Contract liabilities		(546	)		38
Accounts payable and accrued liabilities		540			600
Net cash used in operating activities		(228	)		(392	)

Investing Activities
Capital expenditures		-			(3	)
Proceeds from disposal of equipment		10			3
Net cash provided by in investing activities		10			-

Financing Activities
Repayments on lease financing		(24	)		(26	)
Proceeds from loans with officers and directors		80			326
Net cash provided by financing activities		56			300


Net change in cash and cash equivalents		(162	)		(92	)
Cash and cash equivalents, beginning of year		400			245
Cash and cash equivalents, end of period	$	238		$	153

~~(in~~The ~~thousands)~~accompanying notes are an integral part of these interim condensed consolidated statements.

	Nine Months Ended November 30,
	2022			2021
Operating Activities
Net loss	$	(943	)	$	(1,387	)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation expense		171			200
Amortization of intangible assets		97			96
Provision for doubtful accounts		—			2
Inventory related charges		—			827
Gain on sale of equipment		(3	)		—
Gain on extinguishment of PPP loans		—			(1,084	)
Other		16			(36	)
Changes in working capital items:
Accounts receivable		(336	)		609
Inventories		555			112
Prepaid expenses and other assets		(71	)		(26	)
Contract assets		(247	)		742
Employee retention credit refund receivable		333			(796	)
Contract liabilities		(458	)		(49	)
Accounts payable and accrued liabilities		217			441
Net cash provided by (used in) operating activities		(669	)		(349	)
Investing Activities
Capital expenditures		(44	)		(56	)
Proceeds from sale of equipment		3			—
Net cash provided by (used in) investing activities		(41	)		(56	)
Financing Activities
Repayments of long-term debt		—			(74	)
Repayments on lease financing		(78	)		(57	)
Proceeds from loans with officers and directors		826			458
Net cash provided by (used in) financing activities		748			327
Net change in cash and cash equivalents		38			(78	)
Cash and cash equivalents, beginning of year		245			293
Cash and cash equivalents, end of period	$	283		$	215

~~The~~Table ~~accompanying notes are an integral part~~ of ~~these interim condensed consolidated statements.~~ Contents

5Video Display Corporation and Subsidiaries

~~Table~~May of31, ~~Contents~~2023

~~Video~~Note ~~Display~~1. ~~Corporation~~– ~~and~~Basis ~~Subsidiaries~~of Presentation of Principles of Consolidation

~~November 30~~The accompanying unaudited interim condensed consolidated financial statements include the accounts of Video Display Corporation and its subsidiaries (“Video Display,” the “Company,” “we,” or “us”). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying condensed consolidated balance sheet as of February 28, 2023 has been derived from audited financial statements. The accompanying unaudited condensed consolidated financial statements as of, and for the three months ended, May 31, 2023 and 2022 have been prepared in accordance with (i) accounting principles generally accepted in the U.S. for interim financial information and (ii) the instructions to Form 10-Q and Rule 10-01 of Regulation S-X of the U.S. Securities and Exchange Commission (“SEC”). Accordingly, such statements do not include all of the information and disclosures required by accounting principles generally accepted in the U.S. for a complete presentation of financial statements. In the opinion of management, all adjustments (including those of a normal, recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months ended May 31, 2023, are not necessarily indicative of the results that may be expected for the year ending February 29, 2024. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in Video Display’s Annual Report on Form 10-K for the year ended February 28, 2023 filed with the SEC on May 30, 2023.

Note 12. – ~~Basis~~Going ofConcern, ~~Presentation~~Banking of& ~~Principles of Consolidation~~ Liquidity

10The 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 three-Qmonth period ending May 31, 2023 primarily due to insufficient revenues in the Company. The Company also had a decrease in liquid assets for the three- month period primarily as a result of the lack of revenue. The Company has sustained losses for the last three 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 May 31, 2023 and February 28, 2023:

10-01

	May 31, 2023			February 28, 2023

Working capital	$	(1,463	)	$	(1,297	)
Liquid assets	$	238		$	400

SThe Company has increased marketing efforts in its ruggedized displays, and small specialty displays in an effort to increase revenue. New products in the ruggedized area have been and are being developed. The Company will begin production in the next quarter on two new products and an updated product it has been selling for years. The Company has orders in house for all three of these products. In addition, the Company has continued to streamline its operations and is focusing on increasing revenues by executing initiatives such as upgrading its sales and marketing efforts including targeting efforts towards repeatable business, the hiring of an experienced Rugged Display Business Development Manager, signing with a manufacturer’s representative which specializes in the Rugged Display business, increased customer visits, trade shows and e-Xmail blasts to market all the product lines it sells. The Company's revenues were down compared to the prior year quarter due to supply chain issues and engineering delays on the new products. The Lexel Imaging facility in Lexington, KY is working with some customers on last time buys for certain types of CRTs while also exploring new opportunities that are a fit for the division. Unicomp, the Company’s keyboard manufacturer, has increased sales over last year by getting a new product to market. The Company moved the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The former headquarters and distribution center in Tucker, Georgia closed as of March 31, 2022.

~~10-K~~8

~~Note~~Table 2.of ~~– Going Concern, Banking & Liquidity~~ Contents

~~The~~Video ~~accompanying~~Display ~~unaudited~~Corporation ~~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 nine-month period ending November 30, 2022 primarily due to insufficient revenues in the Company. The Company had an increase in liquid assets for the nine- month period. The Company has sustained losses for the last three 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 November 30, 2022 and February 28, 2022:Subsidiaries

	November 30, 2022			February 28, 2022
Working capital	$	(403	)	$	509
Liquid assets	$	283		$	245

May 31, 2023

~~e-mail~~In order to assist funding operating activity, the Company’s CEO loaned an additional $80,000 to the Company during the first quarter of fiscal year 2024. There is no line of credit outstanding or other financing currently in place other than the note payable with the Company's CEO with a balance of $1,464,000. 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 May 31, 2023.

6The 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.

~~Table~~Note of3. ~~Contents~~– Recent Accounting Pronouncements

~~Video~~Accounting ~~Display~~Pronouncements ~~Corporation~~Recently ~~and Subsidiaries~~ Adopted

~~November~~In 30June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost, including trade receivables. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. This guidance is effective for annual reporting periods beginning after December 15, 2022 for smaller reporting companies, with early adoption permitted. This standard was effective for the Company as of March 1, 2023 and there was no impact on the financial statements at adoption.

noNote 4. – Inventories

~~The~~Inventories ~~ability~~are ofstated ~~the~~at ~~Company to continue as a going concern is dependent upon~~ the ~~success~~lower of ~~management’s~~cost ~~plans~~(first ~~to improve revenues~~in, ~~the~~first ~~operational~~out) ~~effectiveness of continuing operations, the procurement of suitable financing,~~ or amarket ~~combination~~and ofconsisted ~~these. The uncertainty regarding the potential success~~ of ~~management’s plan creates substantial doubt about~~ the ~~ability~~following of(in ~~the Company to continue as a going concern.~~ thousands):

Note 3. – Recent Accounting Pronouncements

	May 31,		February 28,
	2023		2023

Raw materials	$	1,474	$	1,179
Work-in-process		695		762
Finished goods		633		517
	$	2,802	$	2,458

~~Accounting Pronouncements Recently Adopted~~ 9

~~2019-12, Income~~Table of Contents

~~2019-12”),~~Video Display Corporation and Subsidiaries

~~2019-12~~May 31, 2023

~~Recent~~Note ~~Accounting~~5. ~~Pronouncements~~– ~~Not~~Note ~~Yet~~Payable ~~Adopted~~to Officers and Directors (Related Party Transactions)

~~2016-13~~The Company increased borrowings by $80 thousand to fund working capital needs and owes an additional $48 thousand in Company rent for the quarter ending May 31, 2023, that is due to the CEO. The $1,464 thousand note contains no repayment terms and is expected to be repaid in fiscal 2024 along with the $664 thousand in rent owed. The note payable and rent owed are included in the Company’s condensed consolidated balance sheets a of May 31, 2023 as a note payable to officers and directors and within accounts payable, respectively.

~~2016-13~~Note 6. – Leases

~~2016-13~~Operating Leases

~~Note~~The 4Company leases its office space and manufacturing facilities under operating lease agreements. -The ~~Inventories~~base lease terms expire at various dates from 2023 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities.

~~Inventories~~Balance ~~are~~sheet ~~stated~~information atrelated ~~the~~to ~~lower~~operating ofleases ~~cost~~is ~~(first~~as ~~in,~~follows ~~first out) or market and consisted of the following~~ (in thousands):

	November 30, 2022		February 28, 2022
	May 31, 2023		February 28, 2023
Raw materials	$	1,565	$	2,037
Assets
Work-in-process		873		846
Operating lease right-of-use assets	$	363	$	482
Finished goods		349		459
Liabilities
	$	2,787	$	3,342
Current portion of operating lease liabilities	$	236	$	313
Noncurrent portion of operating lease liabilities		127		169
Total operating lease liabilities	$	363	$	482

7Operating lease costs are included in Cost of goods sold in the Company’s condensed consolidated statements of operations and totaled approximately $125 thousand for the three months ended May 31, 2023 and $114 thousand for the three months ended May 31, 2022.

~~Table~~Cash paid for amounts included in the measurement of ~~Contents~~operating lease liabilities was approximately $125 thousand for the three months ended May 31, 2023 and $114 thousand for the three months ended May 31, 2022. The Company did not modify any existing leases or execute any new leases during the three months ended May 31, 2023.

~~Video~~Weighted ~~Display~~average ~~Corporation~~information ~~and~~associated ~~Subsidiaries~~with the measurement of the Company’s remaining operating lease obligations is as follows:

November 30, 2022

	May 31, 2023			February 28, 2023
Weighted average remaining lease term (in years)		1.0			1.6
Weighted average discount rate		6	%		6	%

~~Note~~The 5.following –table ~~Paycheck~~summarizes ~~Protection~~the ~~Promissory~~maturity ~~(“PPP”)~~of ~~Related~~the ~~Loans~~Company’s operating lease liabilities as of May 31, 2023 (in thousands):

On April 13, 2020, our Lexel Imaging subsidiary entered into a PPP loan for $216,200 and on January 27, 2021, entered into a second round PPP loan for $304,442. On April 23, 2020, Video Display Corporation entered into a $772,000 first round PPP loan and on February 11, 2021, entered into a second round PPP loan for $780,112. The PPP loans were made under, and were subject to the terms and conditions of the PPP which was established under the CARES Act and is administered by the U.S. Small Business Administration. Under the terms of the CARES Act, recipients can apply for and receive forgiveness for all, or a portion of the loans granted under the PPP. Such forgiveness was granted, based on the use of loan proceeds for certain permissible purposes as set forth in the PPP, including, but not limited to, payroll costs, mortgage interest, rent or utility costs (collectively, “Qualifying Expenses”), and on the maintenance of employee and compensation levels during a certain time period following the funding of the PPP loans.

FY2024	$	194
FY2025		185
Total operating lease payments		379
Less imputed interest		(16	)
Total operating lease liabilities	$	363

The Company has used the proceeds of the PPP loans for Qualifying Expenses. In fiscal 2021, the Company received forgiveness on the first round $216,200 Lexel Imaging PPP loan in November 2020 and on the first round $772,000 Video Display PPP loan in December 2020. The Company received forgiveness on the second round of PPP loans ($1,084,554 in aggregate) in August 2021 (fiscal 2022). The forgiveness qualified as a gain on extinguishment of debt on the consolidated statements of operations and the related liability was removed from the consolidated balance sheets based on the forgiveness date of the related PPP loan. 10

~~Note~~Table 6.of ~~– Note Payable to Officers and Directors (Related Party Transactions)~~ Contents

~~The~~Video ~~Company~~Display ~~increased~~Corporation ~~borrowings~~and ~~from the CEO by $~~Subsidiaries

~~thousand~~May to31, ~~fund working capital needs and owes the CEO an additional $~~2023

~~thousand~~Included in the above are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by the Company’s ~~rent~~chief executive officer) under operating leases expiring at various dates through 2025. Lease costs under these leases totaled approximately $47 thousand for the ~~nine~~three months ~~ending~~ended ~~November 30~~May 31, ~~2022.~~2023 ~~The~~and $97 thousand for the three months ended May 31, 2022.

~~thousand~~The ~~note~~Company ~~contains~~subleases certain of its warehousing space at its Kentucky location. The amount of the sublease is negligible as of May 31, 2023 and totaled approximately $15,000 for the three months ended May 31, 2022.

Financing ~~repayment terms and is expected to be repaid in~~ Leases

The ~~along~~Company ~~with~~has ~~the~~one financing lease entered into on November 23, 2020 for Tempest testing equipment for $277,000 and is included in machinery and equipment on the condensed consolidated balance sheets as of May 31, 2023 and February 28, 2023. The lease expires on December 1, 2023 and the incremental borrowing rate on the lease is 12.5%.

~~thousand~~Balance insheet ~~rent~~information ~~owed.~~related ~~The~~to ~~note~~financing ~~payable~~lease ~~and~~is ~~rent~~as ~~owed~~follows ~~are included~~ (in ~~the Company’s consolidated balance sheets as of November 30, 2022 as a note payable to officers and directors and within accounts payable, respectively.~~thousands):

Note 7. – Leases

	May 31, 2023		February 28, 2023
Machinery and equipment, net	$	53	$	69
Current portion of financing lease liabilities	$	50	$	74
Noncurrent portion of financing lease liabilities		-		-
Total financing lease liabilities	$	50	$	74

~~Operating~~The ~~Leases~~following table summarizes the maturity of the Company’s finance lease liabilities as of May 31, 2023 (in thousands):

The Company leases its office space and manufacturing facilities under operating lease agreements. The base lease terms expire at various dates from 2022 to 2025. While each of the leases include renewal options, the Company has only included the base lease term in its calculation of lease assets and liabilities.

Fiscal Year	Amount

2024	$	52
Total finance lease payments	$	52
Less imputed interest		(2	)
Total finance lease liabilities	$	50

~~Balance sheet information related to operating leases is as follows (in thousands):~~ 11

	November 30, 2022
Assets
Operating lease right-of-use assets	$	599
Liabilities
Current portion of operating lease liabilities	$	388
Noncurrent portion of operating lease liabilities		211
Total operating lease liabilities	$	599

Table of Contents

~~Operating~~Video ~~lease~~Display ~~costs~~Corporation ~~are included in Cost of goods sold in the Company’s condensed consolidated statements of operations~~ and totaled approximately $125 thousand for the three months ended November 30, 2022, and $329 thousand for the nine months ended November 30, 2022. Operating lease costs were $104 thousand for the three months ended November 30, 2021 and $405 thousand for the nine months ended November 30, 2021. Subsidiaries

8May 31, 2023

~~Table~~Note of7. ~~Contents~~– Supplemental Cash Flow Information

~~Video~~Supplemental ~~Display~~cash ~~Corporation~~flow ~~and~~information ~~Subsidiaries~~is as follows (in thousands):

November 30, 2022

	Three Months
	Ended May 31,
	2023		2022
Cash paid for:
Interest	$	2	$	5

~~thousand~~Note ~~for the three months and nine months ended November 30, 2022~~8. ~~The~~– ~~Company~~Shareholders’ ~~paid $~~Equity

~~one-year~~Earnings (Loss) Per Share

~~Weighted~~Basic earnings (loss) per share is computed by dividing income or loss available to common shareholders by the weighted average ~~information~~number ~~associated~~of ~~with~~common shares outstanding during each period. Shares issued during the ~~measurement~~period are weighted for the portion of the ~~Company’s~~period ~~remaining~~that ~~operating~~they ~~lease~~were ~~obligations~~outstanding. Diluted earnings (loss) per share is ascalculated ~~follows:~~in a manner consistent with that of basic earnings (loss) per share while giving effect to all potentially dilutive common shares that were outstanding during the period.

	November 30, 2022
Weighted average remaining lease term		2.2 years
Weighted average discount rate		6	%

The following table sets forth the computation of basic and diluted earnings (loss) per share for the three-month periods ended May 31, 2023 and 2022 (in thousands, except per share data):

The following table summarizes the maturity of the Company’s operating lease liabilities as of November 30, 2022 (in thousands):

				Weighted
				Average		Loss
	Net			Common Shares		Per
	Loss			Outstanding		Share
Three months ended May 31, 2023
Basic	$	(297	)		5,878	$	(0.05	)
Effect of dilution:
Options		-			-		-
Diluted	$	(297	)		5,878	$	(0.05	)

Three months ended May 31, 2022
Basic	$	(295	)		5,878	$	(0.05	)
Effect of dilution:
Options		-			-		-
Diluted	$	(295	)		5,878	$	(0.05	)

FY2023	$	125
FY2024		319
FY2025		185
Total operating lease payments		629
Less imputed interest		(30	)
Total operating lease liabilities	$	599

Stock options, debentures, and other liabilities convertible into 200,000 shares, of the Company’s common stock were anti-dilutive and, therefore, were excluded from the May 31, 2023 and 2022 diluted earnings (loss) per share calculations. For the three-month period ended May 31, 2023 and May 31, 2022, there was no expense related to share-based compensation as all options were fully vested. No options were granted for the three-month period ending May 31, 2023 or for the three month period ended May 31, 2022.

~~Included~~Stock ~~above~~Repurchase are leases for manufacturing and warehouse facilities leased from Southeast Metro Savings, LLC and Honeyhill Properties, LLC (entities which are controlled by the Company’s chief executive officer) under operating leases expiring at various dates through 2025. Lease costs under these leases totaled approximately $47 thousand for the three months and $208 thousand for the nine months ended November 30, 2022. Lease costs under these leases totaled approximately $97 thousand for the three months and $291 thousand for the nine months ended November 30, 2021. Program

The Company ~~subleases~~has ~~certain~~a ofstock ~~its~~repurchase ~~warehousing~~program, ~~space~~pursuant atto ~~its~~which ~~Kentucky~~it ~~location~~had onbeen aauthorized ~~month~~to repurchase up to ~~month~~2,632,500 ~~basis~~shares of the Company’s common stock in the open market. ~~The~~On ~~Tucker~~January ~~sublease~~20, ~~expired~~2014, ~~concurrently~~the ~~with~~Board of Directors of the ~~head~~Company ~~lease~~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 Company’s common stock in the open market. There is no minimum number of shares required to be repurchased under the program.

~~. The Tucker lessee did not pay any rent for March and we do not expect them to pay, therefore it is not included in Other Income.~~ 12

~~Sublease~~Table ~~income and lease income are included in Other, net in the Company’s condensed consolidated statements~~ of operations and totaled approximately $2 thousand for the three months and $19 thousand for the nine months ended November 30, 2022 and totaled approximately $55 thousand for the three months and $172 thousand for the nine months ended November 30, 2021. Contents

~~Financing~~Video ~~Leases~~Display Corporation and Subsidiaries

~~The~~May ~~Company has one financing lease entered into on November 23~~31, 2020 for Tempest testing equipment for $277,000 and is included in machinery and equipment on the condensed consolidated balance sheets as of November 30, 2022 and February 28, 2022. The lease expires on December 1, 2023 ~~and the incremental borrowing rate on the lease is 12.5%.~~

9For the quarter ending May 31, 2023 and May 31, 2022, the Company did not purchase any shares of the Video Display Corporation stock. Under the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at May 31, 2023.

~~Table~~Note of9. ~~Contents~~– Income Taxes

~~Video~~Due ~~Display~~to ~~Corporation~~the Company’s overall and ~~Subsidiaries~~historical net loss position, no income tax expense was reported for the three- month period ending May 31, 2023 and May 31, 2022. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses.

~~November~~Note ~~30,~~10. ~~2022~~– Legal Proceedings

~~Balance~~The ~~sheet~~Company ~~information~~is involved in various legal proceedings related to ~~financing~~claims ~~lease~~arising in the ordinary course of business. The Company is asnot ~~follows~~currently ~~(in~~party ~~thousands):~~to any legal proceedings the result of which management believes is likely to have a material adverse impact on its business, financial position, results of operations or cash flows.

	November 30, 2022
Financing lease right-of-use assets	$	98
Current portion of financing lease liabilities	$	98
Noncurrent portion of financing lease liabilities		—
Total financing lease liabilities	$	98

Note 11. – Subsequent Events

~~The~~Lexel ~~following~~Imaging, ~~table~~subsidiary ~~summarizes~~of ~~the~~Video ~~maturity~~Display ofCorporation, ~~the~~entered ~~Company’s~~into ~~finance~~an extension of its current lease ~~liabilities~~with asnew ofterms ~~November 30~~effective August 1, ~~2022~~2023. (The extension is for a one-year term. The lease calls for a reduction in ~~thousands):~~square feet and a corresponding reduction in rent. The new lease will result in a new ROU asset of $185 thousand and a new lease liability of $185 thousand.

Fiscal Year	Amount
2023	$	26
2024		78
Total finance lease payments	$	104
Less imputed interest		(6	)
Total finance lease liabilities	$	98

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Note~~The 8following .discussion –should ~~Supplemental~~be ~~Cash~~read ~~Flow~~in ~~Information~~conjunction with the attached unaudited interim condensed consolidated financial statements and with the Company's 2023 Annual Report to Shareholders, which included audited consolidated financial statements and notes thereto as of and for the fiscal year ended February 28, 2023, as well as Management's Discussion and Analysis of Financial Condition and Results of Operations.

~~Supplemental cash flow information is as follows (in thousands):~~ Overview

	Nine Months Ended November 30,
	2022		2021
Cash paid for:
Interest	$	13	$	21

The Company manufactures and distributes a wide range of display devices, encompassing, among others, industrial, military, medical, and simulation display solutions. The Company is comprised of one segment - the manufacturing and distribution of displays and display components. The Company is organized into four interrelated operations aggregated into one reportable segment.

~~Note~~● 9.Simulation and Training Products – ~~Shareholders’~~offers ~~Equity~~a wide range of projection display systems for use in training and simulation, military, medical, entertainment and industrial applications.

~~Earnings~~● ~~(Loss)~~Cyber ~~Per~~Secure ~~Share~~Products – offers advanced TEMPEST technology, and EMSEC products. This business also provides various contract services including the design and testing solutions for defense and niche commercial uses worldwide.

~~Basic~~● ~~earnings~~Data ~~(loss)~~Display ~~per~~CRTs ~~share~~– isoffers ~~computed~~a bywide ~~dividing~~range ~~income or loss available to common shareholders by the weighted average number~~ of ~~common~~CRTs ~~shares outstanding during each period. Shares issued during the period are weighted~~ for ~~the~~use ~~portion of the period that they were outstanding. Diluted earnings (loss) per share is calculated~~ in adata ~~manner~~display ~~consistent~~screens, ~~with~~including ~~that~~computer ofterminal ~~basic~~monitors ~~earnings~~and ~~(loss)~~medical ~~per~~monitoring ~~share while giving effect to all potentially dilutive common shares that were outstanding during the period~~equipment.

10● Other Computer Products – offers a variety of keyboard products.

~~Table of Contents~~13

~~Video~~Table ~~Display~~of ~~Corporation and Subsidiaries~~ Contents

~~November~~Video ~~30,~~Display ~~2022~~Corporation and Subsidiaries

~~The~~May ~~following table sets forth the computation of basic and diluted earnings (loss) per share for the three and nine month periods ended November 30~~31, ~~2022 and 2021 (in thousands, except per share data):~~ 2023

	Net Income (Loss)			Weighted Average Common Shares Outstanding		Earnings (Loss) Per Share
Three months ended November 30, 2022
Basic	$	(713	)		5,878	$	(0.12	)
Effect of dilution:
Options		—			—		—
Diluted	$	(713	)		5,878	$	(0.12	)
Three months ended November 30, 2021
Basic	$	(806	)		5,878	$	(0.14	)
Effect of dilution:
Options		—			—		—
Diluted	$	(806	)		5,878	$	(0.14	)

During fiscal 2024, management of the Company is focusing key resources on strategic efforts to grow its business through internal sales of the Company’s more profitable product lines and reduce expenses in all areas of the business to bring its cost structure in line with the current size of the business. Challenges facing the Company during these efforts include:

	Net Income (Loss)			Weighted Average Common Shares Outstanding		Earnings (Loss) Per Share
Nine months ended November 30, 2022
Basic	$	(943	)		5,878	$	(0.16	)
Effect of dilution:
Options		—			—		—
Diluted	$	(943	)		5,878	$	(0.16	)
Nine months ended November 30, 2021
Basic	$	(1,387	)		5,878	$	(0.24	)
Effect of dilution:
Options		—			—		—
Diluted	$	(1,387	)		5,878	$	(0.24	)

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 three-month period ending May 31, 2023 primarily due to insufficient revenues in the Company. The Company also had a decrease in liquid assets for the three-month period primarily as a result of the lack of revenue. The Company has sustained losses for the last three 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 May 31, 2023 and February 28, 2023:

Stock options, debentures, and other liabilities convertible into 200,000 shares of the Company’s common stock were anti-dilutive and, therefore, were excluded for the nine months ended November 30, 2022 and 2021 diluted loss per share calculations. For the three-month and nine -month periods ended November 30, 2022 and November 30, 2021, there was no expense related to share-based compensation as all options were fully vested. No options were granted for the nine- month period ending November 30, 2022 or for the nine -month period ended November 30, 2021.

	May 31, 2023			February 28, 2023

Working capital	$	(1,463	)	$	(1,297	)
Liquid assets	$	238		$	400

~~Stock~~The ~~Repurchase~~Company ~~Program~~has increased marketing efforts in its ruggedized displays, and small specialty displays in an effort to increase revenue. New products in the ruggedized area have been and are being developed. The Company will begin production in the next quarter on two new products and an updated product it has been selling for years. The Company has orders in house for all three of these products. In addition, the Company has continued to streamline its operations and is focusing on increasing revenues by executing initiatives such as upgrading its sales and marketing efforts including targeting efforts towards repeatable business, the hiring of an experienced Rugged Display Business Development Manager, signing with a manufacturer’s representative which specializes in the Rugged Display business, increased customer visits, trade shows and e-mail blasts to market all the product lines it sells. The Company’s revenues were down compared to the prior year quarter due to supply chain issues and engineering delays on the new products. The Lexel Imaging facility in Lexington, KY is working with some customers on last time buys for certain types of CRTs while also exploring new opportunities that are a fit for the division. Unicomp, the Company’s keyboard manufacturer, has increased sales over last year by getting a new product to market. The Company moved the corporate accounting functions to the Cocoa, Florida location which allows the Company to become more efficient and save money on reducing redundant operations. The former headquarters and distribution center in Tucker, Georgia closed as of March 31, 2022.

~~one-time~~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 create substantial doubt about the ability of the Company to continue as a going concern.

11Inventory valuation – Management regularly reviews the Company’s investment in inventories for declines in value and writes down the cost when it is apparent that the expected net realizable value of the inventory falls below its carrying amount. The Company operates in an environment of constantly changing technologies and retains a certain amount of inventory for legacy products for maintenance and replacement capabilities for its customers. The Company maintains inventory on certain products to ensure it has adequate inventory to fulfill orders for transitioning product lines. Management reviews inventory levels on a quarterly basis. Such reviews include observations of product development trends of the original equipment manufacturers, new products being marketed, and technological advances relative to the product capabilities of the Company’s existing inventories.

~~Table of Contents~~14

~~Video~~Table ~~Display~~of ~~Corporation and Subsidiaries~~ Contents

~~November~~Video ~~30,~~Display ~~2022~~Corporation and Subsidiaries

~~For~~May ~~the nine-months ending November 30~~31, 2022 and November 30, 2021, the Company did not purchase any shares of the Video Display Corporation stock. Under the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at November 30, 2022. 2023

~~Note~~Impact ~~10.~~of COVID-19 – ~~Income~~The ~~Taxes~~Company has been actively monitoring the novel coronavirus, or COVID-19, situation and its impact globally. Financial results for the three months ended May 31, 2023 and 2022 have been impacted by COVID-19 due to delayed orders and/or the fulfillment of the related orders. However, the Company currently does not expect any material impact on our financial results for the remainder of fiscal 2024.

~~Due~~Results toof the Company’s overall and historical net loss position, no income tax expense was reported for the nine- month period ending November 30, 2022 and November 30, 2021. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses. Operations

~~Note~~The ~~11.~~following –table ~~Legal~~sets ~~Proceedings~~forth, for the three months ended May 31, 2023 and 2022, the percentages that selected items in the Interim Condensed Consolidated Statements of Operations bear to total sales (amounts in thousands):

The Company is involved in various legal proceedings related to claims arising in the ordinary course of business. The Company is not currently party to any legal proceedings the result of which management believes is likely to have a material adverse impact on its business, financial position, results of operations or cash flows.

Three Months

Ended May 31,

2023

2022

Net Sales

Amount

Simulation and Training (VDC Display Systems)

1,851

72.3

2,052

72.2

Data Display CRT (Lexel and Data Display)

308

12.0

476

16.8

Cyber Secure Products (AYON Cyber Security)

3.2

2.5

Other Computer Products (Unicomp)

318

12.5

241

8.5

Total net sales

2,560

100.0

2,841

100.0

Costs and expenses

Cost of goods sold

1,891

73.9

2,130

75.0

Selling and delivery

3.3

149

5.2

General and administrative

892

34.8

870

30.6

2,867

112.0

3,149

110.8

Operating loss

(307

)

(12.0

(308

)

(10.8

Interest income (expense), net

)

(0.1

)

(0.2

Other income, net

0.5

0.6

Loss before income taxes

(297

)

(11.6

(295

)

(10.4

Income tax expense

Net loss

(297

)

(11.6

(295

)

(10.4

~~ITEM 2.~~Net ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~ sales

~~The~~Consolidated ~~following~~net ~~discussion~~sales ~~should~~decreased be9.9% ~~read~~for inthe ~~conjunction~~three ~~with~~months ended May 31, 2023 compared to the ~~attached~~three ~~unaudited~~months ~~interim~~ended ~~condensed~~May ~~consolidated~~31, ~~financial~~2022. ~~statements~~The ~~and~~Display ~~with~~Systems division decreased 9.8% for the three months ended May 31, 2023 or $0.2 million, due primarily to overall delays in raw materials for current orders. The Company’s ~~2022~~AYON ~~Annual~~Cyber ~~Report~~Security todivision ~~Shareholders~~increased 15.3% for the three months ended May 31, ~~which~~2023 ~~included~~or ~~audited~~$11 ~~consolidated~~thousand ~~financial~~compared ~~statements~~to ~~and~~the ~~notes~~same ~~thereto~~three asmonths oflast year. The division is primarily doing service work and testing for ~~the~~customers. The ~~fiscal~~attempts ~~year~~to ~~ended~~bring ~~February 28~~in product business have been unsuccessful including a drop off in government bids last fall. The Data Display division had a decrease of 35.3% or $0.2 million, ~~2022~~due to decreased orders from its CRT customers. The Data division is working closely with the customers to place orders before some materials become unavailable. Lexel is working with customers in Asia for their needs on direct view storage tubes (DVST) and should have steady business driven by replacement CRTs for simulators, asmedical ~~well~~CRTs asand ~~Management’s~~phosphor ~~Discussion~~coating business improvements. The CRT business continues to slow and ~~Analysis~~Lexel ofis ~~Financial~~dependent ~~Condition~~on receiving orders for the DVST products and ~~Results~~developing other new business. The keyboard division had an increase in sales of ~~Operations~~32.0% or $77 thousand, the business rebounded this year after the launch of the new Mini M keyboard which has been in development for months. All divisions have experienced some form of delay in new orders from customers due to supply chain issues mostly involving products requiring micro-chips, but there are signs that businesses are finding ways to move forward.

~~Overview~~ 15

~~The~~Table ~~Company manufactures and distributes a wide range~~ of display devices, encompassing, among others, industrial, military, medical, and simulation display solutions. The Company is comprised of one segment—the manufacturing and distribution of displays and display components. The Company is organized into four interrelated operations aggregated into one reportable segment. Contents

•Video ~~Simulation~~Display ~~and~~Corporation ~~Training Products – offers a wide range of projection display systems for use in training~~ and ~~simulation, military, medical, entertainment and industrial applications.~~Subsidiaries

•May ~~Cyber Secure Products – offers advanced TEMPEST technology~~31, ~~and EMSEC products. This business also provides various contract services including the design and testing solutions for defense and niche commercial uses worldwide.~~2023

•Gross ~~Data Display CRTs– offers a wide range of CRTs for use in data display screens, including computer terminal monitors and medical monitoring equipment.~~margins

•Consolidated ~~Other~~gross ~~Computer~~margins ~~Products~~increased –as ~~offers~~ a ~~variety~~percentage ofto ~~keyboard~~sales ~~products~~(26.1% from 25.0%), but decreased in actual dollars by $42 thousand due to lower sales for the three months ended May 31, 2023 compared to the three months ended May 31, 2022.

~~During~~The ~~fiscal~~VDC ~~2023,~~Display ~~management~~Systems ofdivision ~~the~~gross ~~Company~~margin ispercentage ~~focusing~~to ~~key~~sales ~~resources~~was onequivalent ~~strategic~~compared ~~efforts~~ to ~~grow~~last ~~its~~year ~~business~~and ~~through~~decreased ~~internal~~$69 ~~sales~~thousand ofdue ~~the~~to ~~Company’s~~lower ~~more~~sales ~~profitable~~at ~~product~~the ~~lines~~division ~~and~~for ~~reduce~~the ~~expenses~~quarter inended ~~all~~May ~~areas~~31, of2023 ~~the~~compared ~~business~~ to ~~bring~~last ~~its~~year. ~~cost~~VDC ~~structure~~Display inSystems ~~line~~sales ~~with~~and ~~the~~gross ~~current~~margins ~~size~~were ofaffected ~~the~~by ~~business.~~delay ~~Challenges~~in ~~facing~~some ~~the~~orders ~~Company~~due ~~during~~to ~~these~~backorders ~~efforts~~on ~~include:~~parts needed to complete orders.

12The AYON Cyber Security division increased gross margins by $15 thousand on service business. The gross margin percentage was 13.1% for the period ended May 31, 2023 compared to a negative 5.4% for the same quarter last year.

~~Table~~The Data Display division had a negative gross margin of ~~Contents~~$59 thousand or a negative 19.1% compared to a negative gross margin of $1 thousand and a negative gross margin of 0.3% for the three months ended May 31, 2023 and May 31, 2022, respectively.

~~Video~~The ~~Display~~keyboard ~~Corporation~~division, ~~and~~Unicomp, ~~Subsidiaries~~increased gross margins by 350.8% due to an increase in sales of 32% while controlling the production costs. The sales mix also contributed to the better margins. Gross margin dollars were $89 thousand compared to $20 thousand for the comparable period ended May 31, 2023. The gross margin percentage was 27.8% compared to 8.2% for the comparable three-month period ended May 31, 2023.

~~November~~Operating ~~30, 2022~~ expenses

~~Liquidity~~Operating –expenses decreased by 4.2% or $43 thousand for the three months ended May 31, 2023 compared to the three months ended May 31, 2022. The decrease was due to the decreased costs in selling expenses. The Company reduced costs primarily in salaries, commissions and benefits by not replacing staff when they resigned while business was slow. The customers were reassigned to different representatives. Sales mix also contributed to the decrease in sales expenses with outside commissions being lower this year.

inInterest liquid assets for the nine- month period. The Company has sustained losses for the last three 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 November 30, 2022 and February 28, 2022: expense

	November 30, 2022			February 28, 2022
Working capital	$	(403	)	$	509
Liquid assets	$	283		$	245

Interest expense was $2 thousand for the quarter ended May 31, 2023 compared to $5 thousand for the quarter ended May 31, 2022. The interest expense was on the lease of TEMPEST equipment.

~~e-mail~~Other Income/Expense

InFor ~~order~~the tothree ~~assist~~months ~~funding~~ended ~~operating~~May ~~activity~~31, 2023 the Company’s ~~CEO~~had ~~loaned an additional~~ $~~826,000~~10 tothousand ~~the~~in ~~company during~~ the ~~first~~sale ~~nine months~~ of ~~fiscal~~fully ~~year~~depreciated ~~2023.~~assets ~~There~~and is$2 nothousand ~~line~~for ofinsurance ~~credit~~audit ~~outstanding~~refund. orFor ~~other financing currently in place other than~~ the ~~note~~three ~~payable~~months ~~with~~ended ~~the~~May ~~Company CEO with a balance of $1~~31,~~284,000.~~ ~~There are no repayment terms related to the loan~~2022, ~~however,~~ the Company ~~plans~~had to$15 ~~repay~~thousand ~~the~~in ~~note~~rental ~~within~~income ~~the next twelve months~~ and ~~therefore~~$3 ~~has~~thousand ~~classified the loan as a current liability~~ on the ~~condensed~~sale ~~consolidated balance sheets as~~ of ~~November 30, 2022~~assets.

~~The~~Income 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. taxes

~~Inventory~~Due to the Company’s overall and historical net loss position, no income tax expense was reported for the three- month period ending May 31, 2023 and May 31, 2022. Due to continued losses reported by the Company, a full valuation allowance was allocated to the deferred tax asset created by these losses.

13 16

Table of Contents

Video Display Corporation and Subsidiaries

~~November~~May 3031, ~~2022~~ 2023

~~COVID-19~~Liquidity and Capital Resources

~~coronavirus~~The accompanying unaudited interim condensed consolidated financial statements were prepared on a going concern basis, ~~or COVID~~ 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 three-19month period ending May 31, ~~situation~~ 2023 primarily due to insufficient revenues in the Company. The Company did have a decrease in liquid assets for the three-month period primarily as a result of the lack of revenue. The Company has sustained losses for the last three 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 May 31, 2023 and February 28, 2023:

impacted by COVID-19 due to

	May 31, 2023			February 28, 2023

Working capital	$	(1,463	)	$	(1,297	)
Liquid assets	$	238		$	400

~~If the COVID-19 pandemic~~ Management continues to implement plans to improve liquidity and to increase revenues at all divisions. 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 create substantial doubt about the ability of the Company to continue as a going concern.

~~Results~~Cash used in operations for the quarter ended May 31, 2023 was $0.2 million. Deductions to net loss of ~~Operations~~$0.1 million for depreciation. Changes in working capital were minimal, and primarily relate to a change in contract assets of $0.2 million, a change in accounts receivable of $0.3 million and a change in accounts payable of $0.5 million, offset by a change in contract liabilities of $0.5 million, a change in inventory of $0.4 million and a change in prepaids of $0.1 million. Cash used in operations for the quarter ended May 31, 2022 was $0.4 million.

~~The~~Investing ~~following~~activities ~~table~~included ~~sets~~$10 ~~forth,~~thousand ~~for~~of ~~the~~proceeds ~~three~~from ~~and~~disposal ~~nine~~of ~~months~~equipment ~~ended~~for ~~November 30, 2022 and 2021,~~ the ~~percentages~~period ~~that~~ended ~~selected~~May ~~items~~31, in2023. ~~the~~There ~~Interim~~was ~~Condensed~~no ~~Consolidated~~net ~~Statements~~investing ofactivity ~~Operations~~for ~~bear~~the toperiod ~~total~~ended ~~sales~~May ~~(amounts~~31, ~~in thousands):~~ 2022.

	Three Months						Nine Months
	Ended November 30,						Ended November 30,
	2022			2021			2022			2021
Net Sales
Simulation and Training (VDC Display Systems)		64.2	%		63.8	%		65.4	%		57.9
Data Display CRT (Lexel and Data Display)		19.7			15.9			18.7			13.2
Cyber Secure Products (AYON Cyber Security)		4.3			1.7			5.3			10.3
Other Computer Products (Unicomp)		11.8			18.6			10.6			18.6
Total net sales		100.0	%		100.0	%		100.0	%		100.0
Costs and expenses
Cost of goods sold		82.5	%		134.3	%		76.7	%		102.6
Selling and delivery		5.5			7.8			5.7			7.6
General and administrative		52.4			60.5			40.0			53.4
		140.4	%		202.6	%		122.4	%		163.6
Operating loss		(40.4	)%		(102.6	)%		(22.4	)%		(63.6	)
Interest income (expense), net		(0.2	)%		(0.4	)%		(0.2	)%		(0.3	)
Other income (expense), net		(1.6	)		53.2			8.1			38.2
Income (loss) before income taxes		(42.2	)%		(49.8	)%		(14.5	)%		(25.7	)
Income tax expense		—			—			—			—
Net income (loss)		(42.2	)%		(49.8	)%		(14.5	)%		(25.7	)

Financing activities provided $0.1 million from proceeds from borrowings from the Company CEO for the period ended May 31, 2023. Financing activities provided $0.3 million for the period ended May 31, 2022 from proceeds from additional borrowing from the Company’s CEO.

~~Net~~The ~~sales~~Company has a stock repurchase program, pursuant to which it has been authorized to repurchase up to 2,632,500 shares of the Company’s 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 Company’s 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.

~~Consolidated~~For ~~net sales increased 20.8% for~~ the ~~nine~~quarter ~~months~~ending ~~ended~~May ~~November 30~~31, ~~2022,~~2023 and ~~increased~~May ~~4.4% for the three months ended November 30~~31, 2022, ~~compared to~~ the ~~nine~~Company ~~months~~did ~~and~~not ~~three~~purchase ~~months~~any ~~ended~~shares ~~November 30,~~of ~~2021.~~the ~~The~~Video Display ~~Systems~~Corporation ~~division was up 36~~stock.3% ~~for~~Under the ~~nine~~Company’s ~~months~~stock ~~ended~~repurchase ~~November 30~~program, ~~2022~~an ~~compared~~additional to490,186 ~~the~~shares ~~comparable~~remain ~~period~~authorized ~~last~~to ~~year.~~be ~~The~~repurchased ~~division~~by ~~has~~the aCompany ~~varied~~at ~~mix~~May ~~of products including ruggedized displays~~31, ~~simulation, projector systems and~~ 2023.

14 17

Table of Contents

Video Display Corporation and Subsidiaries

~~November~~May 3031, ~~2022~~ 2023

~~specialty~~Critical ~~displays.~~Accounting ~~For~~Policies the three months ended November 30, 2022, the Display System division was up 5.1% compared to the same three months last year. The Company is focused on the ruggedized displays sector of the business, having delivered approximately $1.7 million of rugged displays to three customers this year and recently received orders for ruggedized displays of approximately $5.6 million. The Company’s AYON Cyber Security (ACS) division is down 37.7% for the nine months ending November 30, 2022 compared to the nine months last year. Their business decreased due to lack of product orders for the Department of the State and Canada. The Company’s service side of the cyber business (testing other company’s products for compliance) was their primary revenue source. For the three months ending November 30, 2022 ACS business increased 172.3% compared to the comparable three-month period from last year on negligible sales. The Data Display division increased 71.8% and 29.1% for the nine months and three months ended November 30, 2022 compared to the same period in the prior year due to increases in the sales of CRTs to a large customer. The Company is expecting order(s) for a specialty product, a direct view storage tube (DVST) which should help revenues in the next fiscal year. Sales for this product have been slow due to the pandemic. The division expects to sell the DVST products for at least the next five to seven years. The Company’s keyboard division was down 31.2% for the nine months ended November 30, 2022 and down 33.8% for three months ended November 30, 2022 respectively compared to the same periods last year. The primary reason for the decrease was a micro controller used in production became unavailable and certain of the products had to be redesigned with a new micro controller. This redesign is nearly complete. The Company acquired this company in October of 2017. This division is expected to continue at this level of sales each quarter. Estimates

~~Gross~~Management’s ~~margins~~Discussion and Analysis of Financial Condition and Results of Operations are based upon the Company’s 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:

~~Consolidated~~Inventory gross margins were increased both as a percentage to sales (23.3% from (2.6)%) and actual dollars ($1,514 thousand from $(137) thousand) for the nine months ended November 30, 2022 compared to the nine months ended November 30, 2021. For the three months ended November 30, 2022, consolidated gross margins increased as a percentage to sales (17.5% from (34.4)%) and actual dollars ($295 thousand from $(555) thousand). Valuation

~~VDC~~Management ~~Display~~regularly ~~Systems~~reviews ~~gross~~the ~~margin~~Company’s ~~dollars~~investment ~~were~~in ~~$1,412 thousand~~inventories ~~compared~~for todeclines ~~$461 thousand~~in ~~for~~value ~~the~~and ~~nine~~writes ~~months~~down ~~ended~~the ~~November 30,~~cost ~~2022~~when ~~compared~~it tois apparent that the ~~nine~~expected ~~months~~net ~~ended~~realizable ~~November 30,~~value ~~2021.~~of ~~VDC~~the ~~Display~~inventory ~~Systems~~falls ~~gross~~below ~~margin~~its ~~percentage~~carrying ~~also~~amount. ~~increased~~The ~~from~~Company ~~14.8%~~operates toin ~~33.3%~~an ~~for~~environment ~~the~~of ~~nine~~constantly ~~months~~changing ~~ended~~technologies ~~November 30,~~and ~~2022~~retains ~~compared~~a tocertain ~~the~~amount ~~same~~of ~~nine~~inventory ~~months~~for inlegacy ~~2021.~~products ~~AYON~~for ~~Cyber~~maintenance ~~Security~~and ~~gross~~replacement ~~margin~~capabilities ~~dollars~~for ~~were~~its ~~$72 thousand~~customers. ~~compared~~The toCompany ~~$158 thousand~~maintains ~~for~~inventory ~~the~~on ~~nine~~certain ~~months~~products ~~ended~~to ~~November 30,~~ensure ~~2022~~it ~~compared~~has adequate inventory to ~~the~~fulfill ~~nine~~orders ~~months~~for ~~ended~~transitioning ~~November 30,~~product ~~2021~~lines. ~~AYON~~Management ~~Cyber~~reviews ~~Security~~inventory ~~gross~~levels ~~margin~~on ~~percentage~~a ~~decreased~~quarterly ~~to 21~~basis.0% ~~from~~Such ~~28.7%~~reviews ~~for~~include ~~the~~observations ~~nine~~of ~~months~~product ~~ended~~development ~~November 30,~~trends ~~2022~~of ~~compared~~the tooriginal ~~the~~equipment ~~same~~manufacturers, ~~nine~~new ~~month~~products ~~period~~being inmarketed, ~~2021~~and ~~due~~technological advances relative to the ~~sales~~product ~~mix~~capabilities of ~~primarily service jobs as~~ the ~~material~~Company’s ~~costs~~existing ~~were lower~~inventories.

~~The~~Revenue Data Display division had a negative gross margin of $99 compared to a negative gross margin of $1,072 thousand for the nine months ended November 30, 2022 and November 30, 2021 respectively. The keyboard division, Unicomp, had $129 thousand of gross margin dollars or 18.7% to sales for the nine months ending November 30, 2022 compared to $315 thousand or 31.4% for the nine months ending November 30, 2021. Recognition

~~For~~We ~~the~~recognize ~~three~~revenue ~~months~~when ~~ended~~we ~~November 30,~~transfer ~~2022,~~control of the ~~display~~promised ~~division~~products ~~(rugged~~or ~~displays,~~services ~~specialty~~to ~~displays~~our customers, ~~simulators~~in ~~and~~an ~~video~~amount ~~walls)~~that ~~produced~~reflects ~~115%~~the ofconsideration ~~gross~~we ~~margins.~~expect ~~The~~to ~~division~~be ~~had~~entitled anto ~~increase~~ in ~~gross~~exchange ~~margin~~for ~~percentage~~those toproducts ~~sales~~or ~~from 10~~services.6% ~~last~~We ~~year~~derive toour ~~31.1%~~revenue ~~this~~primarily ~~year.~~from ~~The~~sales ~~Data division saw an increase in gross margins~~ of ~~$580 thousand~~simulation ~~from~~and avideo ~~negative~~wall ~~$679 thousand~~systems, ~~the~~cyber ~~prior~~secure ~~year~~products, ~~quarter~~data todisplays, aand ~~negative $99 thousand this quarter~~keyboards. ~~Unicomp~~We ~~gross~~exclude ~~margin dollars decreased by $32 thousand due to a decrease in~~ sales. ~~The~~and ~~cyber~~usage-based ~~division~~taxes ~~had~~from ~~an increase in gross margin dollars of $71 thousand~~revenue.

15Our simulation and video wall systems are custom-built (using commercial off-the-shelf products) to customer specifications under fixed price contracts. Judgment is required to determine whether each product and service is considered to be a distinct performance obligation that should be accounted for separately under the contract. Generally, these contracts contain one performance obligation (the installation of a fully functional system). We recognize revenue for these systems over time as control is transferred based on labor hours incurred on each project.

~~Table~~We recognize revenue related to our cyber secure products, data displays, and keyboards at a point in time when control is transferred to the customer (generally upon shipment of ~~Contents~~the product to the customer).

~~Video~~Timing ~~Display~~of ~~Corporation~~invoicing to customers may differ from timing of revenue recognition; however, our contracts do not include a significant financing component as substantially all of our invoices have terms of 30 days or less. We are applying the practical expedient to exclude from consideration any contracts with payment terms of one year or less and ~~Subsidiaries~~we never offer terms extending beyond one year.

~~November~~Income ~~30, 2022~~ Taxes

~~Operating~~Deferred ~~expenses~~income taxes are provided to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of May 31, 2023, the Company has established a valuation allowance of $6.3 million on the Company’s deferred tax assets.

Operating expenses decreased 9.5% or $311 thousand for the nine months ended November 30, 2022 compared to the nine months ended November 30, 2021. The decrease was due primarily to the decreased costs in administration expenses. The Company reduced costs primarily in salaries, by not replacing staff when they resigned while business was slow. The Company expects to continue to control costs while increasing revenues in tempest services, specialized displays and ruggedized displays. As business increases we will look to fill some of the vacant positions in the engineering and production areas in the fourth quarter of this fiscal year. 18

~~Operating~~Table ~~expenses decreased by 11.5% or $127 thousand for the three months ended November 30, 2022 compared to the three months ended November 30, 2021. The decrease was due primarily to the reduction~~ of ~~salaries and contractor expenses including commissions.~~ Contents

~~Interest~~Video ~~expense~~Display Corporation and Subsidiaries

~~Interest~~May ~~expense was $13 thousand for the nine months ended November 30~~31, 2022 compared to $20 thousand for the nine months ended November 30, 2021. Interest expense was $4 thousand for the three months ended November 30, 2022 and $6 thousand for the three months ended November 30, 2021. Interest expense in fiscal 2023 ~~relates primarily to interest expense on the lease of TEMPEST equipment.~~

~~Other~~The ~~Income/~~Company ~~expense~~accounts for uncertain tax positions under the provisions of ASC 740, which contains a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating the Company's tax positions and tax benefits, which may require periodic adjustments. At May 31, 2023, the Company did not record any liabilities for uncertain tax positions.

~~For~~Forward-Looking ~~the~~Information nine months ended November 30, 2022, the Company received $498 thousand in proceeds from a class action lawsuit, $19 thousand in rental income, $32 thousand in retention credit revenue, $3 thousand on the sale of assets and $4Risk in interest income. Other expense netted against other income was $31 thousand for the payout of a lawsuit. For the nine months ended November 30, 2021, the Company had $1.1 million in gains on the extinguishment of PPP loans, $796 thousand in employee retention credit income, $172 thousand in rental income, and $4 thousand in debt recovery offset by $5.4 thousand in commissions on the rental income. Factors

~~For~~This ~~the~~report ~~three~~contains ~~months~~forward-looking ~~ended~~statements ~~November 30~~and information that is based on management’s beliefs, ~~2022~~as ~~the~~well ~~Company~~as ~~had~~assumptions ~~$2 thousand~~made by, and information currently available to management. When used in ~~rental~~this ~~income~~document, the words “anticipate,” “believe,” “estimate,” “intends,” “will,” and $2“expect” ~~thousand~~and insimilar ~~interest~~expressions ~~income~~are ~~offset~~intended byto ~~$31 thousand~~identify ~~for~~forward-looking ~~the~~statements. ~~payout~~Such ofstatements involve a ~~lawsuit.~~number ~~For~~of ~~the~~risks ~~three~~and ~~months~~uncertainties. ~~ended~~These ~~November 30~~risks and uncertainties, ~~2021~~which are included under Part I, Item 1A. Risk Factors in the Company’s ~~had~~Annual ~~$796 thousand~~Report inon ~~employee~~Form ~~retention~~10-K ~~credit~~for ~~income,~~the ~~$64.4 thousand~~year inended ~~rental~~February ~~income~~28, ~~offset~~2023 bycould ~~$1.8 thousand~~cause inactual ~~rental~~results ~~commissions.~~to differ materially.

~~Income~~ITEM ~~taxes~~3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

~~Due~~The ~~to the~~ Company’s ~~overall~~primary ~~and~~market ~~historical~~risks ~~net~~include ~~loss~~changes ~~position,~~in notechnology. ~~income~~The ~~tax~~Company ~~has~~operates ~~been~~in ~~reported~~an ~~and~~industry awhich ~~full~~is ~~valuation~~continuously ~~allowance~~changing. ~~has~~Failure ~~been~~to ~~allocated~~adapt to the ~~deferred~~changes ~~tax~~could ~~asset~~have ~~created~~a bydetrimental ~~these~~effect ~~losses.~~on the Company.

~~Liquidity~~ITEM ~~and~~4. ~~Capital~~CONTROLS ~~Resources~~AND PROCEDURES

~~The~~Our ~~accompanying~~disclosure ~~unaudited~~controls ~~interim~~and ~~condensed~~procedures ~~consolidated~~(as ~~financial~~defined ~~statements~~in ~~were~~Exchange ~~prepared~~Act onRule 13a-15(e)) aare ~~going~~designed ~~concern~~to ~~basis,~~provide ~~which~~reasonable ~~contemplates~~assurance ~~the~~that ~~realization~~information ofrequired ~~assets~~to ~~and~~be ~~the~~disclosed ~~satisfaction of liabilities~~ in ~~the~~our ~~normal~~reports ~~course~~filed ofor ~~business.~~submitted ~~The~~under ~~Company~~the ~~reported~~Securities aExchange ~~net~~Act ~~loss~~of ~~and~~1934, asuch ~~decrease~~as inthis ~~working~~quarterly ~~capital~~report ~~for~~on ~~the nine~~Form 10-~~month~~Q, ~~period~~is ~~ending~~recorded, ~~November 30~~processed, ~~2022~~summarized ~~primarily~~and ~~due~~reported towithin ~~insufficient revenues in~~ the ~~Company.~~time ~~The~~periods ~~Company had~~specified ~~an increase~~ in ~~liquid assets for~~ the ~~nine-~~SEC ~~month~~rules ~~period. The Company has sustained losses for the last three of five fiscal years~~ and ~~has~~forms. ~~seen~~Our ~~overall~~disclosure acontrols ~~decline in working capital~~ and ~~liquid~~procedures ~~assets~~are ~~during~~also ~~this~~designed ~~five~~to ~~-year~~ensure ~~period.~~that ~~Annual~~such ~~losses~~information ~~over~~is ~~this~~accumulated ~~time~~and ~~are~~communicated ~~due~~ to aour ~~combination~~management, ofincluding ~~decreasing~~our ~~revenues~~chief ~~across~~executive ~~the~~officer ~~divisions without a commensurate reduction of expenses. The Company’s working capital~~ and ~~liquid~~chief ~~asset~~financial ~~position~~officer, ~~are~~to ~~presented~~allow ~~below~~timely ~~(in~~decisions ~~thousands)~~regarding asrequired ~~of November 30, 2022 and February 28, 2022:~~ disclosure.

16Our chief executive officer and chief financial officer have conducted an evaluation of the effectiveness of our disclosure controls and procedures as of May 31, 2023. We perform this evaluation on a quarterly basis so that the conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our annual report on Form 10-K and quarterly reports on Form 10-Q. Based on this evaluation, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective as of May 31, 2023.

~~Table~~Changes ofin ~~Contents~~Internal Controls

~~Video~~There ~~Display~~have ~~Corporation~~not been any changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and ~~Subsidiaries~~15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~November 30, 2022~~ 19

	November 30,2022			February 28,2022
Working capital	$	(403	)	$	509
Liquid assets	$	283		$	245

Table of Contents

~~Management~~Video ~~continues~~Display toCorporation ~~implement plans to improve liquidity~~ and to increase revenues at all divisions. 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 create substantial doubt about the ability of the Company to continue as a going concern. Subsidiaries

~~Cash~~May ~~used in operations for the nine months ended November 30~~31, 2022 was $0.7 million. Deductions to net loss were $0.3 million for depreciation and amortization. Changes in working capital were negligible, primarily change in contract assets of $0.2 million, a change in accounts payables of $0.2 million, a change in accounts receivable of $0.3 million and a change in prepaid expenses and other assets of 0.1 million, offset by a change in inventories of $0.6 million, a change in employee retention credit receivables of $0.3 million. Cash used in operations for the nine months ended November 30, 2021 was $0.3 million. Adjustments to net loss were non cash operating items of $0.3 million for depreciation and amortization, $0.8 million for inventory related charges and $1.1 million related to the gain recorded on the extinguishment of the remaining PPP loans. Changes in working capital provided $1.0 million, primarily from $0.6 million in accounts receivable, $0.1 million from the decrease in inventory, $0.7 million from the change in contract assets and $0.4 million from the change in accounts payable and accrued liabilities partially offset by a $0.8 million in employee retention credit refund receivable. 2023

~~Investing~~PART ~~activities used $41 thousand and $56 thousand for the nine months ended November 30, 2022 and November 30, 2021 respectively for capital equipment.~~ II

~~Financing~~Item ~~activities provided $0~~1.~~7 million~~ ~~for~~Legal the nine months ended November 30, 2022 primarily from proceeds from additional borrowing from the Company’s CEO. For the nine months ended November 30, 2021, financing activities provided $0.3 million resulting primarily from $458 thousand of additional borrowings from the CEO offset by the repayment of notes of $74 thousand and lease financing of $57 thousand. Proceedings

~~one-time~~None.

~~For~~Item ~~the nine months ending November 30, 2022 and November 30, 2021, the Company did not purchase any shares of the Video Display Corporation stock~~1A. ~~Under~~Risk ~~the Company’s stock repurchase program, an additional 490,186 shares remain authorized to be repurchased by the Company at November 30, 2022.~~ Factors

~~Critical~~Information ~~Accounting~~regarding ~~Policies~~risk factors appears under the caption Forward-Looking Information and ~~Estimates~~Risk Factors in Part I, Item 2 of this Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2023. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

~~Management’s~~Item ~~Discussion~~2. ~~and~~Unregistered ~~Analysis~~Sales of ~~Financial~~Equity ~~Condition~~Securities and ~~Results~~Use of Operations are based upon the Company’s 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 Proceeds

17 None.

~~Table~~Item of3. ~~Contents~~Defaults upon Senior Securities

~~Video Display Corporation and Subsidiaries~~ None.

~~November~~Item ~~30,~~4. ~~2022~~Submission of Matters to a Vote of Security Holders

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 assetsNone. ~~The Company uses the following methods and assumptions in determining its estimates:~~

~~Inventory~~Item ~~Valuation~~5. Other information

Management regularly reviews the Company’s investment in inventories for declines in value and writes down the cost when it is apparent that the expected net realizable value of the inventory falls below its carrying amountNone. The Company operates in an environment of constantly changing technologies and retains a certain amount of inventory for legacy products for maintenance and replacement capabilities for its customers. The Company maintains inventory on certain products to ensure it has adequate inventory to fulfill orders for transitioning product lines. Management reviews inventory levels on a quarterly basis. Such reviews include observations of product development trends of the original equipment manufacturers, new products being marketed, and technological advances relative to the product capabilities of the Company’s existing inventories.

~~Revenue~~Item ~~Recognition~~6. Exhibits

We recognize revenue when we transfer control of the promised products or services to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or services. We derive our revenue primarily from sales of simulation and video wall systems, cyber secure products, data displays, and keyboards. We exclude sales and usage-based taxes from revenue.

Exhibit Number		Exhibit Description

3(a)		Articles of Incorporation of the Company (incorporated by reference to Exhibit 3A to the Company’s Registration Statement on Form S-18 filed January 15, 1985).
3(b)		By-Laws of the Company (incorporated by reference to Exhibit 3B to the Company’s Registration Statement on Form S-18 filed January 15, 1985).
10(b)		Lease dated February 19, 2015 by and between Registrant (Lessee) and Ordway Properties LLC (Lessor) with respect to premises located at 5155 King Street, Cocoa, FL. (incorporated by reference to Exhibit 10(g) to the Company’s 2015 Annual Report on Form 10-K.)
10(c)		Video Display Corporation 2006 Stock Incentive Plan. (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement on Schedule 14A)
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

~~off-the-shelf~~20

WeTable ~~recognize revenue related to our cyber secure products, data displays, and keyboards at a point in time when control is transferred to the customer (generally upon shipment~~ of ~~the product to the customer).~~ Contents

Timing of invoicing to customers may differ from timing of revenue recognition; however, our contracts do not include a significant financing component as substantially all of our invoices have terms of 30 days or less. We are applying the practical expedient to exclude from consideration any contracts with payment terms of one year or less and we never offer terms extending beyond one year. SIGNATURES

~~Other~~Pursuant ~~Loss~~to ~~Contingencies~~the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Other loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will exceed the recorded provision. Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple factors that often depend on judgments about potential actions by third parties.

		VIDEO DISPLAY CORPORATION

July 17, 2023	By:	/s/ Ronald D. Ordway
		Ronald D. Ordway Chief Executive Officer

Income Taxes

July 17, 2023

By:

/s/ Gregory L. Osborn

Gregory L. Osborn

Chief Financial Officer

Deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of November 30, 2022, the Company has established a valuation allowance of $5.9 million on the Company’s deferred tax assets. 21

Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2022

two-step

Forward-Looking Information and Risk Factors

10-K

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company’s primary market risks include changes in technology. The Company operates in an industry which is continuously changing. Failure to adapt to the changes could have a detrimental effect on the Company.

ITEM 4. CONTROLS AND PROCEDURES

Rule 13a-15(e))

Form 10-Q,

10-K

10-Q.

As we continue to evaluate our internal control over financial reporting, we may determine that additional measures should be taken to address the identified control deficiency or other deficiencies, and/or that we should modify the remediation plan described below.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our consolidated financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of our internal control over financial reporting described above, management concluded that, as of November 30, 2022, a material weakness existed in our internal control over financial reporting.

Table of Contents

Video Display Corporation and Subsidiaries

November 30, 2022

Our material weakness related to the following control deficiency:

We did not design and maintain effective controls over inventory. Specifically, controls confirming that inventory received was recorded in the correct reporting period. In addition, controls pertaining to timely assessing and valuing inventory at the lower of cost or net realizable value while considering changes in technology and market conditions that may impact the valuation of inventory were not operating effectively. These control deficiencies in the aggregate resulted in a material weakness in internal control over financial reporting pertaining to inventory. The control deficiencies identified resulted in errors in the Company’s books and records which led to audit adjustments for the year ended February 28, 2022. The errors noted were not material to the financial statements reported in any interim or annual period and did not result in a revision to previously filed financial statements. However, these control deficiencies could result in misstatements of the aforementioned accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected in a timely manner. Accordingly, we have determined that these control deficiencies when evaluated in the aggregate constitute a material weakness.

Remediation of Material Weakness in Internal Control Over Financial Reporting

Management is committed to maintaining a strong internal control environment and is in the process of implementing control deficiency remediation efforts which includes retraining and hiring additional resources to assist with the inventory management processes. The Company believes that these remediation efforts will represent improvements in the related controls. The Company has started to implement these steps, however, some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist.

Changes in Internal Controls

Rules 13a-15(f) and

15d-15(f) under

Video Display Corporation and Subsidiaries

November 30, 2022

PART II

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Information regarding risk factors appears under the caption Forward-Looking Information and Risk Factors in Part I, Item 2 of this Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended February 28, 2022. There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other information

None.

Item 6. Exhibits

ExhibitNumber		Exhibit Description
3(a)		Articles of Incorporation of the Company (incorporated by reference to Exhibit 3A to the Company’s Registration Statement on Form S-18 filed January 15, 1985). (P)
3(b)		By-Laws of the Company (incorporated by reference to Exhibit 3B to the Company’s Registration Statement on Form S-18 filed January 15, 1985). (P)
10(a)		Lease dated April 1, 2015 by and between Registrant (Lessee) and Ronald D. Ordway (Lessor) with respect to premises located at 1868 Tucker Industrial Road, Tucker, Georgia. (incorporated by reference to Exhibit 10(c) to the Company’s 2015 Annual Report on Form 10-K.)
10(b)		Lease dated February 19, 2015 by and between Registrant (Lessee) and Ordway Properties LLC (Lessor) with respect to premises located at 5155 King Street, Cocoa, FL. (incorporated by reference to Exhibit 10(g) to the Company’s 2015 Annual Report on Form 10-K.)
10(c)		Video Display Corporation 2006 Stock Incentive Plan. (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement on Schedule 14A)
31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

II-1

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

January 17, 2023	By:	/s/ Gregory L. Osborn
		Gregory L. Osborn
		Chief Financial Officer

VIDEO DISPLAY CORPORATION

January 17, 2023

/s/ Ronald D. Ordway

Ronald D. Ordway

Chief Executive Officer

Filing Compare · VIDEO DISPLAY CORP