VIDEO DISPLAY CORP (Form: 10-K, Received: 05/29/2015 16:06:30)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

(Mark One)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended February 28, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-13394

VIDEO DISPLAY CORPORATION

(Exact name of registrant as specified in its charter)


Georgia		58-1217564
(State of Incorporation)		(IRS Employer Identification No.)

1868 Tucker Industrial Road, Tucker Georgia		30084
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code: (770) 938-2080

Securities Registered Pursuant to Section 12(b) of the Act:


Title of each class		Name of each exchange on which registered
Common Stock, no par value		OTCMKTS

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ¨ NO x

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES ¨ NO x

Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) 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 x NO ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). YES ¨ NO x

As of August 31, 2014, the aggregate market value of the voting and non-voting common equity held by non-affiliates based upon the closing sales price for the Registrant’s common stock as reported in the NASDAQ National Market System was $4,212,058.

The number of shares outstanding of the registrant’s Common Stock as of May 1, 2015 was 5,949,623.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive proxy statement to be delivered to stockholders in connection with our 2015 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K. In addition, certain exhibits previously filed with the registrant’s prior Forms 10-K, Forms 8-K, Form S-18 and Schedule 14A are incorporated by reference in Part IV of this Form 10-K.

VIDEO DISPLAY CORPORATION

TABLE OF CONTENTS


ITEM NUMBER		PAGE NUMBER
	PART I

Item 1.	Business		2
Item 1A.	Risk Factors		5
Item 1B.	Unresolved Staff Comments		8
Item 2.	Properties		8
Item 3.	Legal Proceedings		8
Item 4.	Submission of Matters to a Vote of Security Holders		8

	PART II

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		9
Item 6.	Selected Financial Data		10
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		17
Item 8.	Financial Statements and Supplementary Data		18
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		40
Item 9A(T).	Controls and Procedures		40
Item 9B.	Other Information		42

	PART III

Item 10.	Directors, Executive Officers and Corporate Governance		43
Item 11.	Executive Compensation		43
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		43
Item 13.	Certain Relationships and Related Transactions, and Director Independence		43
Item 14.	Principal Accounting Fees and Services		43

	PART IV

Item 15.	Exhibits, Financial Statement Schedules		44
	Signatures		44

PART I

Item 1. Business.

General

Video Display Corporation and subsidiaries (the “Company”, “us” or “we”) is a provider and manufacturer of video products, components, and systems for visual display and presentation of electronic information media in a variety of requirements and environments. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced display products and systems, from basic components to turnkey systems, for government, military, aerospace, medical, industrial, and commercial organizations. The Company markets its products worldwide primarily from facilities located in the United States. Please read the comments under the caption “Forward looking statements and risk factors” in Item 1A Risk Factors of this Annual Report on Form 10-K.

Description of Principal Business

The Company generates revenues from the manufacturing and distribution of displays and display components. The Company operates primarily in four divisions: Display CRTs, simulation and training products, broadcast and control center products, and cyber secure products.

Consolidated Net Sales by division for fiscal 2015 are comprised of the following:

Simulation and Training Products (63%)

Data Display CRTs (21%)

Broadcast and Control Center Products (4%)

Cyber Secure Products (12%)

A more detailed discussion of sales by category of product is included under the section entitled “Principal Products by Division.”

The Company’s manufacturing and distribution facilities are located in Kentucky, Georgia and Florida.

The Company continues to explore opportunities to expand its product offerings in the display industry. The Company anticipates that this expansion will be achieved by adding new products or by acquiring existing companies that would enhance the Company’s position in the display industry. Management continually evaluates product trends externally in the industry and internally in the divisions in which the Company operates. During the last two years, the Company expended research and development funds (approximately $0.1 million in fiscal 2015 and $0.3 million in fiscal 2014) in high-resolution projection displays and active matrix liquid crystal display (“AMLCD”) technologies, for commercial and military applications.

Segment Information

We operate and manage our business as one segment. The four divisions have similarities such as the types of products and markets served. Therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, are reported as one segment within the Consolidated Financial Statements.

Principal Products by Division

Simulation and Training Products

The Company’s simulation and training products operations are conducted in Cape Canaveral, Florida (Display Systems).

This portion of the Company’s operations, which contributed approximately 63% of fiscal 2015 consolidated net sales, involves the design, engineering, and manufacture of digital projector display units. The Company customizes these units for specific applications, including ruggedization for military uses or size reduction due to space limitations in industrial and medical applications. Because of the Company’s flexible and cost efficient manufacturing, it is able to handle low volume orders that generate higher margins.

This portion of the Company’s operations targets niche markets where competition from major multinational electronics companies tends to be lower. The prime customers for these products include defense, security, training, and simulation areas of the United States of America (U.S.) and foreign militaries as well as the major defense contractors such as the Boeing Company, L-3 Communications Corporation, Lockheed Martin Corporation, and others. Flight simulator displays are produced to provide a full range of flight training simulations for military and commercial applications.

Data Display CRTs

Since its organization in 1975, the Company has been engaged in the distribution and manufacture of CRTs using new and recycled CRT glass bulbs, primarily in the replacement market, for use in data display screens, including computer terminal monitors, medical monitoring equipment and various other data display applications and in television sets.

The Company’s Tucker, Georgia location is the Company’s primary distribution point for data display CRTs purchased from outside sources.

The Company also distributes new CRTs and other electronic tubes purchased from original equipment manufacturers (OEMs). The Company sells CRTs into the replacement market which sometimes takes five to seven years to develop; these purchased inventories sometimes do not sell as quickly as other inventories. Bulk CRT purchases have declined over the past few years as the Company is managing current inventory levels against the anticipated reduction in future CRT demand due to the growth of flat panel technology.

The Company maintains an internal sales organization to sell directly to OEMs and their service organizations.

In addition to factors affecting the overall market for such products, the Company’s sales volume in the CRT replacement markets is dependent upon the Company’s ability to provide prompt response to customers’ orders, while maintaining quality control and competitive pricing. The Data Display division represented approximately 21% of fiscal 2015 consolidated net sales.

Broadcast and Control Center Products

The Company began a start-up operation in July 2011, AYON Visual Solutions, as the North American distributor of a German company, eyevis GmbH. The division sells high-end visual display products for use in video walls and command and control centers.

The division has been built thus far by partnering with consultants and system integrators. These partners have first-hand knowledge of the needs of the market and have been educated about the division’s products. Management believes the division will continue to grow by expanding their network of partners and product offerings as eyevis GmbH introduces new products. This division represented approximately 4% of fiscal 2015 consolidated net sales.

Cyber Secure Products

The Company acquired the AYON CyberSecurity (“ACS”) division in March 2012. ACS was formerly known as Hetra Products and most recently as StingRay56 before becoming part of Video Display Corporation . ACS specializes in advanced TEMPEST technology, also known as Emanation Security EMSEC, products and custom engineering solutions to include extreme environmental performance and survivability technologies (MIL-STD-810 and DO-160) in support of military forces, intelligence agencies, prime contractors and niche commercial sectors worldwide. ACS has a long history of specializing in TEMPEST technology. In addition to its TEMPEST products and services, the business also provides various contract services to government agencies and prime contractors. Services performed include design and testing solutions for defense and niche commercial uses worldwide. ACS has offices in the U.S. and Canada, a Reseller Relationship/Partner in Europe and Technology partners around the globe. This division represented approximately 12% of fiscal 2015 consolidated net sales.

Patents and Trademarks

The Company holds patents with respect to certain products and services. The Company also sells products under various trademarks and trade names. The Company believes that success in its industry primarily will be dependent upon incorporating emerging technology into new product line introductions, frequent product enhancements, and customer support and service.

Seasonal Variations in Business

Historically, there has not been seasonal variability in the Company’s business.

Working Capital Practices

In fiscal 2014, with the sale of the Company’s Aydin Displays, Inc and Z-Axis, Inc. subsidiaries, the Company repaid all remaining bank debt, which included a line of credit and two term loans. Currently, the only remaining debt of the Company is $0.2 million it owes on a building owned by its subsidiary, Teltron Technologies, Inc. in Birdsboro, PA.

The Company is currently operating using cash from operations and investing activities. The Company has a $13.1 million working capital balance at February 28, 2015, including $2.6 million in liquid assets.

The Company believes it can continue to operate the Company with existing cash flows for the current level of business. The Company continually monitors its cash and financing positions in order to find ways to lower its costs and to produce positive operating cash flow. The Company examines possibilities to grow its business through internal sales or niche acquisitions. There could be an impact on working capital requirements to fund this growth. As in the past, the intent is to finance such projects with operating cash flows; however, more permanent sources of capital may be required in certain circumstances.

Concentration of Customers

The Company sells to a variety of domestic and international customers on an open-unsecured account basis. These customers principally operate in the medical, military, industrial and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs that comprised approximately 41% and 28% of consolidated net sales for fiscal 2015 and 2014, respectively. Sales to foreign customers were approximately 15% and 10% of consolidated net sales for fiscal 2015 and 2014, respectively. The Company had one customer that comprised 27.2% (Lockheed Martin) of the Company’s consolidated net sales in fiscal 2015. The Company attempts to minimize credit risk by reviewing customers’ credit history before extending credit, and by monitoring customers’ credit exposure on a daily basis. The Company establishes an allowance for doubtful accounts receivable based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Backlog

The Company’s backlog is comprised of undelivered, firm customer orders, which are scheduled to ship within eighteen months. The Company’s backlog was approximately $0.6 million at February 28, 2015 and $3.3 million at February 28, 2014. It is anticipated that more than 85% of the February 28, 2015 backlog will ship during fiscal 2016.

Environmental Matters

The Company’s operations are subject to federal, state, and local laws and regulations relating to the generation, storage, handling, emission, transportation, and discharge of materials into the environment. The costs of complying with environmental protection laws and regulations have not had a material adverse impact on the Company’s consolidated financial condition, results of operations, or cash flow in the past and are not expected to have a material adverse impact in the foreseeable future.

Research and Development

The objectives of the Company’s research and development activities are to increase efficiency and quality in its manufacturing and assembly operations and to enhance its existing product line by developing alternative product applications to existing display systems and electron optic technology. The Company includes research and development expenditures in the consolidated financial statements as a part of general and administrative costs. Research and development costs were approximately $0.1 million and $0.3 million in fiscal 2015 and fiscal 2014 respectively.

Employees

As of February 28, 2015, the Company employed 119 persons on a full-time basis. Of these, 23 were employed in executive, administrative, and clerical positions, 7 were employed in sales and distribution, and 89 were employed in manufacturing operations. The Company believes its employee relations to be satisfactory.

Competition

The Company believes that it has a competitive advantage in the display industry due to its ability to engineer custom display solutions for a variety of industrial, military and commercial applications, its ability to provide internally produced component parts, and its manufacturing flexibility. As a result, the Company can offer more customization in the design and engineering of new products. With the operations of VDC Display Systems, AYON Visual Solutions and AYON CyberSecurity, the Company believes it has become one of the leading suppliers within each of these specialty display markets.

The Company now operates in several markets in the areas of custom electronic solutions. The Company’s VDC Display Systems division specializes in projector design and video solutions, and the Company’s AYON CyberSecurity division specializes in making electronic devices cyber secure. The Company became the North American distributor for the German company, Eyevis GmbH, focusing on configurable visual solutions for command and control and other large format visuals in the energy, utility, transportation, industrial and security markets.

The Company is a wholesale distributor of original equipment CRTs purchased from other manufacturers and from Lexel Imaging, Inc. The Company believes it is the only company that offers complete service in replacement markets with its manufacturing and recycling capabilities. The Company’s ability to compete effectively in this market is dependent upon its continued ability to respond promptly to customer orders and to offer competitive pricing.

Item 1A. Risk Factors.

Forward looking statements and risk factors

All statements other than statements of historical facts included in this report, including, without limitation, those statements contained in Item 1, are statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934. The words “expect”, “estimate”, “anticipate”, “predict”, “believe” and similar expressions and variations thereof are intended to identify forward-looking statements. Such statements appear in a number of places in this report and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) trends affecting the Company’s consolidated financial condition, results of operations or cash flows; (ii) the Company’s financing plans; (iii) the Company’s business and growth strategies, including potential acquisitions; and (iv) other plans and objectives for future operations. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and actual results may differ materially from those predicted in the forward-looking statements or which may be anticipated from historical results or trends.

Our Company operates in technology-based markets that involve a number of risks, some of which are beyond our control. The following discussion highlights some risks and uncertainties that investors should consider, in conjunction with all other information in this Annual Report on Form 10-K. Additional risks and uncertainties not presently known to the Company may impair the Company’s business and operations. If any of the following risks actually occur, the Company’s business, consolidated financial condition, cash flows, or results of operations could be materially affected.

Changes in government priorities may affect military spending, and our consolidated financial condition and results of operations or cash flows could suffer if their purchases decline.

We currently derive a portion of our net sales (41% in fiscal 2015) from direct and indirect sales to the U.S. government. If we are unable to replace expiring contracts, which are typically less than twelve months in duration, with contracts for new business, our sales could decline, which would have a material adverse effect on our business, consolidated financial condition, results of operations, or cash flows. We expect that direct and indirect sales to the U.S. government will continue to account for a substantial portion of our sales in the foreseeable future. We have no assurance that these government-related sales will continue to reach or exceed historical levels in future periods.

Our industry is highly competitive and competitive conditions may adversely affect our business.

Our success depends on our ability to compete in markets that are highly competitive, with rapid technological advances and products that require constant improvement in both price and performance. In most of our markets, we are experiencing increased competition, and we expect this trend to continue. This environment may result in changes in relationships with customers or vendors, the ability to develop new relationships, or the business failure of customers or vendors, which may negatively affect our business. If our competitors are more successful than we are in developing new technology and products, our business may be adversely affected.

Competitive pressures may increase or change through industry consolidation, entry of new competitors, marketing changes or otherwise. There can be no assurance that the Company will be able to continue to compete effectively with existing or potential competitors.

Competitors or third parties may infringe on our intellectual property.

The Company holds patents with respect to certain products and services. The Company also sells products under various trademarks and trade names. Should competitors or third parties infringe on these rights, costly legal processes may be required to defend our intellectual property rights, which could adversely affect our business.

Migration to flat panel and other technology may negatively affect our CRT business.

The Company acquires CRT inventory when the replacement market appears to demonstrate adequate future demand and the purchase price allows a reasonable profit for the risk. Due to the extended time frame for the replacement market to develop (five to seven years), these purchased inventories may not sell as quickly as other inventories. If the Company is unable to manage CRT inventory levels in coordination with reduced future CRT demand due to the growth of flat panel technology, the marketability of inventory on hand may be affected and the Company may incur significant costs in the disposal of excess inventory.

The Company anticipates that flat panel and other technology products, due to their lower space and power requirements, will eventually become the display of choice in many display applications. In anticipation of long-term trends toward flat panel display usage, the Company has focused its efforts and its acquisition strategy toward flat panel technologies. If the Company is unable to replace any future declines in CRT sales with products based on other technologies, our business may be adversely affected.

Future acquisitions may not provide benefits to the Company.

The Company’s growth strategy includes expansion through acquisitions that enhance the profitability and shareholder value of the Company. The Company continues to seek new products through acquisitions and internal development that complement existing profitable product lines. There can be no assurance that the Company will be able to complete further acquisitions or that past or future acquisitions will not have an adverse impact on the Company’s consolidated operations.

Our inability to secure financing could negatively affect the future of our business.

•

Our inability to secure financing with our current bank or others, if necessary, could expose us to the risk of losing business; and

•

Our inability to secure financing with a commercial bank could expose us to the risk of increased interest rates.

No open lines of credit could adversely affect the future operation of our business.

No open lines of credit could have important consequences, including:

•

generating insufficient cash flows from operating activities to meet our payment obligations;

•

increasing our vulnerability to general economic and industry conditions;

•

requiring a substantial portion of cash flow for operating activities and as a result reducing our ability to use our cash flow to fund capital expenditures, capitalize on future business opportunities and expand our business and execute our strategy;

•

causing us to make non-strategic divestitures;

•

limiting our ability to adjust to changing market conditions and to react to competitive pressure and placing us at a competitive disadvantage compared to our competitors who may have access to a line of credit.

If we are unable to retain certain key personnel and hire new, highly-skilled personnel, we may not be able to execute our business plan.

Our future success depends on the skills, experience, and efforts of our senior managers. The loss of services of any of these individuals, or our inability to attract and retain qualified individuals for key management positions, could negatively affect our business.

Our business operations could be disrupted if our information technology systems fail to perform adequately.

We depend upon our information technology systems in the conduct of our operations and financial reporting. If our major information systems fail to perform as anticipated, we could experience difficulties in maintaining normal business operations. Such systems-related problems could adversely affect product development, sales, and profitability.

Changes to accounting rules or regulations may adversely affect our results of operations.

New accounting rules or regulations and varying interpretations of existing accounting rules or regulations have occurred and may occur in the future. Future changes to accounting rules or regulations or the questioning of current accounting practices may adversely affect our consolidated financial condition or results of operations.

The Company’s stock price may be negatively affected by a variety of factors.

In addition to any impact the Company’s operating performance, potential future Company sales or repurchases of common stock, the Company’s dividend policies or possible anti-takeover measures available to the Company may have, changes in securities markets caused by general foreign or domestic economic, consumer or business trends, the impact of interest rate policies by the federal reserve board, and other factors outside the Company’s control may negatively affect our stock price.

Our stock may be traded infrequently and in low volumes, so you may be unable to sell your shares at or near the quoted bid price if you need to sell your shares.

Our stock is now quoted on the OTC Markets and the shares of our common stock may trade infrequently and in low volumes, meaning that the number of persons interested in purchasing our common shares at or near bid prices at any given time may be relatively small or non-existent. An investor may find it difficult to obtain accurate quotations as to the market value of our common stock or to sell his or her shares at or near bid prices if at all.

Changes to estimates, or operating results that are lower than our current estimates, may cause us to incur impairment charges.

If the Company determines it is more likely than not that the fair value of a reporting unit is less than the carrying value, then it applies the processes prescribed in FASB ASC Topic 350 “Intangible Assets ” and FASB ASC Topic 360 “Property, Plant, and Equipment.” We make certain estimates and projections in connection with our impairment analyses for intangible assets and other long-term assets. If these estimates or projections change or prove incorrect, we may be required to record impairment charges. If these impairment charges were significant, our consolidated financial position or results of operations would be adversely affected.

International factors could negatively affect our business.

A significant portion of our consolidated net sales (15% in fiscal 2015) is made to foreign customers. We also receive a significant amount of our raw materials from foreign vendors. We are subject to the risks inherent in conducting our business across national boundaries, many of which are outside of our control. These risks include the following:

•

Economic downturns;

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Currency exchange rate and interest rate fluctuations;

•

Changes in governmental policy, including, among others, those relating to taxation;

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International military, political, diplomatic and terrorist incidents;

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Government instability;

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Nationalization of foreign assets;

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Natural disasters; and

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Tariffs and governmental trade policies.

We cannot ensure that one or more of these factors will not negatively affect our international customers and, as a result, our business and consolidated financial performance.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

The Company leases its corporate headquarters at 1868 Tucker Industrial Road in Tucker, Georgia (within the Atlanta metropolitan area). Its headquarters occupy approximately 10,000 square feet of the total 59,000 square feet at this location. The remainder is utilized as warehouse and assembly facilities. This location, and two others, are leased from a related party at current market rates. See Part III, Item 13 Certain Relationships and Related Transactions in this Annual Report on Form 10-K. Management believes the facilities to be adequate for its needs.

The following table details manufacturing, warehouse, and administrative facilities:


Location	Square Feet		Lease Expires
Tucker, Georgia		59,000	March 31, 2022
Stone Mountain, Georgia		45,000	May 31, 2018
Palm Bay, Florida		21,388	Month to Month
Birdsboro, Pennsylvania		40,000	Company Owned (a)
Cape Canaveral, Florida		30,000	Month to Month
Cocoa, Florida		34,500	February 19, 2025

(a)

The Birdsboro, Pennsylvania property secures mortgage loans from a bank with a principal balance of $0.2 million as of February 28, 2015. This mortgage loan bears an interest rate of approximately 3.75%. Monthly principal and interest payments of approximately $5,000 are payable through October 2021.

Item 3. Legal Proceedings.

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business.

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

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this Annual Report.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.

The Company’s common stock is traded on the Over the Counter Market (OTCMKTS) under the symbol VIDE. The Company had previously traded on National Association of Securities Dealers Automated Quotation System (“NASDAQ”) national market system under the symbol VIDE until April 30, 2015.

The following table shows the range of prices for the Company’s common stock as reported by NASDAQ for each quarterly period beginning on March 1, 2013. The prices reflect inter-dealer prices, without mark-up, mark-down, or commission, and may not necessarily represent actual transactions.


	For Fiscal Years Ended
	February 28, 2015				February 28, 2014
Quarter Ended	High		Low		High		Low
May	$	3.87	$	3.12	$	4.04	$	3.50
August		3.40		3.11		4.54		3.50
November		3.25		2.72		3.88		3.40
February		3.11		2.26		3.94		3.28

There were approximately 325 holders of record of the Company’s common stock as of May 15, 2015.

Payment of cash dividends in the future will be dependent upon the earnings and financial condition of the Company and other factors that the Board of Directors may deem appropriate.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides information as of February 28, 2015 regarding compensation plans (including individual compensation arrangements) under which Common Stock of the Company is authorized for issuance.


Stock Option Plan	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders		73,000	$	4.10		741,000

Issuer Purchases of Equity Securities

The Company has a stock repurchase program, pursuant to which it had 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 in the open market. There is no minimum number of shares required to be repurchased under the program. During the fiscal year ended February 28, 2015, the Company repurchased 1,058,459 shares at an average price of $3.35 per share and during the fiscal year ended February 28, 2014, the Company repurchased 572,597 shares at an average price of $3.78 per share, which were added to treasury shares on the consolidated balance sheet. Under this program, an additional 574,050 shares remain authorized to be repurchased by the Company at February 28, 2015.

Item 6. Selected Financial Data

N/A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

The Company is a worldwide leader in the manufacturing and distribution of 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 pursuant to the aggregation criteria of FASB ASC Topic 280 “Segment Reporting”:

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Simulation and Training Products – offers a wide range of projection display systems for use in training and simulation, military, medical, and industrial applications.

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

•

Broadcast and Control Center Products – offers high-end visual display products for use in video walls and command and control centers.

•

Cyber Secure Products – provides advanced TEMPEST technology and Emanation Security products. This business also provides various contract services including the design and testing solutions for defense and niche commercial uses worldwide.

During fiscal 2015, management of the Company focused key resources on strategic efforts to support the efforts of operations to increase market share. The Company also seeks to look for acquisition opportunities that enhance the profitability and shareholder value of the Company. The Company continues to seek new products through acquisitions and internal development that complement existing profitable product lines. Challenges facing the Company during these efforts include:

Inventory management —The Company wrote-off a substantial portion of its CRT inventory in fiscal 2014 due to the rapid changes in display technology. The Company increased the inventory reserves $0.5 million in the fiscal year ending February 28, 2015 and disposed of $0.3 million of which $0.1 million was included in the reserves, in various raw material parts and demo equipment at its VDC Display division during the current fiscal year 2015 to bring in line with its estimates of the value of the inventory.

The Company’s remaining business units utilize different inventory components than the divisions had in the past. The Company has a monthly reserve at each of its divisions to offset any obsolescence although most purchases are for current orders, which should reduce the amount of obsolescence in the future. The Company still has CRT inventory in stock and although it believes the inventory will be sold in the future will continue to reserve for any additional obsolescence. Management believes its inventory reserves at February 28, 2015 to be adequate.

Operations

The following table sets forth, for the fiscal years indicated, the percentages that selected items in the Company’s consolidated statements of operations bear to total revenues (amounts in thousands):

(See Item 1. Business – Description of Principal Business and Principal Products for discussion about the Company’s Products and Divisions.)


	2015						2014
	Amount			%			Amount			%
Net Sales

Simulation and Training	$	8,106			63.2	%	$	6,882			47.8	%
Data Display CRTs		2,671			20.9			2,146			14.9
Broadcast and Control Centers		473			3.7			3,362			23.3
Cyber Secure Products		1,568			12.2			2,021			14.0

Total Company		12,818			100.0			14,411			100.0

Costs and expenses
Cost of goods sold	$	11,433			89.2	%	$	15,489			107.5	%
Selling and delivery		1,115			8.7			1,686			11.7
General and administrative		3,788			29.6			3,061			21.2

		16,336			127.5			20,236			140.4
Loss from operations		(3,518	)		(27.5	)		(5,825	)		(40.4	)

Interest income/expense		15			0.1			(714	)		(5.0	)
Other income (expense), net		(1,254	)		(9.7	)		593			4.1

Loss before income taxes		(4,757	)		(37.1	)		(5,946	)		(41.3	)
Provision (benefit) from income taxes		1,280			(10.0	)		(486	)		3.4

Net (loss) from continuing operations	$	(6,037	)		(47.1	)%	$	(5,460	)		(37.9	)%

Income from discontinued operations, net of income tax expense		44			0.3			2,779			19.3

Net income (loss)	$	(5,993	)		(46.8	)%	$	(2,681	)		(18.6	)%

Fiscal 2015 Compared to Fiscal 2014

Net Sales

Consolidated net sales decreased $1.6 million or 11.1% to $12.8 million for fiscal 2015, compared to $14.4 million for fiscal 2014 due to a $2.9 million decrease at its AYON Visual Solutions subsidiary. AYON Visual Solutions was not able to secure any large contracts as it had done the previous year. As the Company heads into its new fiscal year, AYON is seeing a substantial increase in its bidding activity and is optimistic that a number of new contracts will be secured this year.

The Company has transitioned into a video display solutions company, but still services the existing CRT markets, which overall account for approximately 21% of the Company’s revenues. The Company’s largest remaining division is VDC Display Systems, which services the simulation and training markets. VDC Display Systems sales increased by 17.8% in fiscal 2015 compared to fiscal 2014, from $6.9 million in fiscal 2014 to $8.1 million in fiscal 2015 primarily due to more government sales in two existing programs VDC Display Systems supplies. The division is expected to improve this next fiscal year due to new business in the government related sector.

The Data Displays CRTs increased their net sales for fiscal 2015 compared to fiscal 2014 by 24.5% or $0.5 million. Sales to their largest customer increased by 5% and the remainder of the increase was primarily due to large infrequent purchases on CRTs which will no longer be available. Business is expected to be strong with their largest customer, but overall sales for this division are expected to decrease as more businesses switch to flat panel technology. AYON CyberSecurity, which services the emanation security market saw their sales decrease by $0.5 million or 22.5% from $2.0 million in fiscal 2014 to $1.6 million in fiscal 2015. The sales decrease was primarily due to timing of orders as the division had their largest backlog at $0.9 million at year end. The cyber security division is expected to increase its revenues in fiscal 2016 with further expansion in the government sector and additional penetration in the commercial market.

Gross Margins

Consolidated gross margins increased to 10.8% for fiscal 2015 from (7.5%) for fiscal 2014. Overall gross margin dollars increased by $2.6 million versus the prior fiscal year.

The Company’s gross margins returned to a more normal level after the negative gross margins from a year ago due to the additional $2.0 million dollar write-off of primarily CRT inventory. The inventory write-off was a non-reoccurring event for the CRT inventory. AYON Visual Solutions and AYON CyberSecurity both had lower gross margins, primarily to reductions in revenue at both divisions. The cyber division is working towards improved margins in new quotes and reducing labor costs through more efficient production methods. Management expects to see improvement in margins at all remaining divisions through better pricing and cost reductions.

Operating Expenses

Operating expenses as a percentage of sales increased from 32.9% for fiscal 2014 to 38.2% for fiscal 2015 primarily reflecting an increase in employee health care costs, legal fees and property taxes. In fiscal 2014, some of the administration costs were offset by corporate allocation charges to the subsidiaries before they were sold.

The Company is working to reduce costs in all areas of the business to bring its cost structure in line with the current size of the business after the sale of the three subsidiaries in fiscal 2014. The remaining business units are making changes to maximize profitability.

Interest Expense

Interest expense was $0.1 million for fiscal 2015 and $0.7 million for fiscal 2014. The Company also earned $0.4 million in interest income for fiscal 2015. Interest expense was averaging $115 thousand per month for the first six months of the fiscal year 2014. When the Company sold its Aydin Displays, Inc. subsidiary on August 30, 2013, all but $1.3 million of the debt with the Company’s bank was paid off, reducing interest expense to approximately $8 thousand per month. In January, the Company sold its Z-Axis Inc., subsidiary and all the remaining bank debt was paid. The only remaining interest (approximately $1.0 thousand per month) is the balance owed on a building the Company owns in Pennsylvania and the interest on the margin balance in the Company’s investment account, which is 2%.

Other Income (loss)

In fiscal 2015, the Company experienced a loss of $1.2 million due primarily to unrealized losses in the investment account of $2.0 million offset by dividend income of $0.3 million, a gain on the sale of a building of $0.4 million and rental income of $0.1 million. During fiscal 2014, the Company lost $0.1 million due to interest expense of $0.7 million offset by a gain on the sale of a building and rental income totaling $0.6 million.

Income Taxes

The Company had net loss before taxes of approximately $4.7 million and an income tax benefit of $1.7 million before the valuation allowance of $3.0 million for a net realizable tax expense of approximately $1.3 million for fiscal 2015, an effective rate of 27%, this compared to a tax benefit of $2.1 million before the valuation allowance of $1.6 million for a net realizable tax benefit of approximately $0.5 million on net losses before taxes of ($5.9) million or a 8% rate for fiscal 2014. The difference between the statutory rate and the effective rate is primarily due to the valuation allowances on the deferred tax assets.

Discontinued Operations

On August 30, 2013, the Company completed the sale of the assets and the transfer of specified liabilities of the Company’s wholly-owned subsidiary, Aydin Displays Inc. (“Aydin”). Aydin’s assets were sold to a newly formed acquisition affiliate of Sparton Corp. for a combination of cash totaling $15 million, plus an additional earn-out potential that could be in excess of $6 million dollars based upon the achievement of reaching certain projected levels of EBITDA generated by the “new” Aydin in the subsequent 12-month period to the August 30, 2013 closing. The sale provisions included a holdback of $1.2 million on the proceeds which was put into an escrow account until August 30, 2014. The Company recognized a gain on the sale of the Aydin assets of $2.9 million pre-tax during the year ended February 28, 2014. The Company did not earn an earn-out as Aydin did not reach the necessary target. Along with the sale, the Company signed a lease agreement with the buyer, whereby the Company rented a building owned by another subsidiary of the Company to the buyer with no rent for a five year period. The Company deferred $0.6 million of the gain, and will recognize it as rental income over the five-year period. Aydin had net sales of $8.3 million and pre-tax net income of $0.5 million for the six months ending August 30, 2013 before the sale.

On January 16, 2014, the Company sold their wholly-owned subsidiary, Z-Axis, Inc. The sale includes Z-Axis as well as its BEAR Power Supplies and Boundless Technologies business units. Z-Axis, Inc. was sold to one of the subsidiary’s original founders for approximately $9 million in cash and a $1 million dollar note. The Company recognized a gain on the sale of $5.4 million pre-tax during the year ended February 28, 2014. Z-Axis, Inc. had $7.8 million in net sales and pre-tax net profit of $0.6 million for the ten and a half months of fiscal 2014 before the sale.

On March 26, 2014 with an effective date of February 28, 2014, the Company completed the sale of the Company’s wholly-owned subsidiary, Lexel Imaging, Inc. to Citadal Partners, LLC for approximately $3.9 million, consisting of $1.0 million cash payable over 180 days and included in current assets as a note and a guarantee to purchase $2.9 million in inventory over a five-year period. The inventory was adjusted to its net realizable value as part of the sale. The Company recognized a loss on the sale of $4.4 million pre-tax during the year ended February 28, 2014. Lexel Imaging, Inc. had net sales of $ 7.6 million and a pre-tax net loss of $0.8 million for the twelve months ending February 28, 2014.

On November 17, 2014 Video Display reacquired Lexel Imaging, Inc when Citadal Partners, LLC defaulted on two notes payable to Video Display Corporation owed as financing on the original sale of the Lexel Imaging. Lexel Imaging is still presented as discontinued operations as Video Display Corporation is still considering offers for the sale of the entity.

Liquidity and Capital Resources

Cash used by operations was $0.4 million in fiscal 2015 and cash provided by operations was $1.1 million in fiscal 2014. During fiscal 2015, adjustments to reconcile net loss to net cash for operating activities used $2.4 million and net working capital items increased by $2.0 million. Of this the Company had adjustments to reconcile the net loss to net cash that included $6.0 million operating loss, $0.4 gain on disposal of assets and $1.0 adjustment for deferred income taxes, realized/unrealized losses on investments of $2.0 million, $0.5 million in inventory reserves and $0.4 million in depreciation and amortization. The changes in the net cash for the working capital items included $2.3 million for inventory and $0.1 million for prepaid and other assets offset by a decrease in accounts payable of $0.5 million, a decrease in deferred revenue of $0.1 million and an increase in accounts receivable of $0.1 million. In fiscal 2014, the Company had adjustments to reconcile net loss to net cash that used $2.8 million in the operating activities of the Company including an operating loss of $2.7 million. Changes in working capital items provided $3.8 million. The change in prepaid expenses and other assets provided $3.6 million, the change in customer receivables provided $1.2 million, deferred revenue provided $0.6 million, and inventories provided $0.6 million, while the change in accounts payable used $1.5 million, and income taxes used $0.7 million.

Investing activities used $3.6 million of cash in fiscal 2015 and provided cash of $19.3 million in fiscal 2014. Investing activities in fiscal 2015 consisted of the net purchase of $3.7 million in trading investments, $0.3 million of cash advances to a discontinued subsidiary and capital expenditures of $0.1 million. This was offset by the proceeds of the sale of a building for $0.5 million. In fiscal 2014, the proceeds from the sale of three subsidiaries provided $23.7 million and the sale of buildings provided $0.5 million. The proceeds of these sales were offset by the purchase of $4.8 million in trading investments and $0.1 million in capital expenditures. The Company does not anticipate significant investments in capital assets for fiscal 2015 beyond normal maintenance requirements.

Financing activities provided cash of $0.5 million in fiscal 2015. Proceeds from marginal float on the investment account were $4.1 million, which was offset by the purchase of $3.5 million of treasury stock and the payment of $0.1 million in debt. Financing activities used cash of $17.2 million during fiscal 2014 primarily to repay debt and for the purchase of $2.2 million of treasury stock in fiscal 2014.

The 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, depending on the market price of the shares. There is no minimum number of shares required to be repurchased under the program. During the fiscal year ended February 28, 2014, the Company repurchased 572,597 shares at an average price of $3.78 per share and during the fiscal year ended February 28, 2015, the Company repurchased 1,058,459 shares at an average price of $3.35 per share, which were added to treasury shares on the consolidated balance sheet. Under this program, an additional 574,050 shares remain authorized to be repurchased by the Company at February 28, 2015.

Transactions with Related Parties, Contractual Obligations, and Commitments

The Company leases two buildings from the Company’s CEO in Tucker, Georgia and one building owned by Ordway Properties LLC in Cocoa, Florida. The buildings in Tucker, Georgia serve as the warehouse operations for the CRT division and the corporate headquarters. The building in Cocoa, Florida will be the new operational site for both VDC Display Systems (currently in Cape Canaveral) and AYON CyberSecurity (currently in Palm Bay). See Note 9.

Contractual Obligations

Future contractual maturities of long-term debt, future contractual obligations due under operating leases, and other obligations at February 28, 2015 are as follows (in thousands):


	Payments due by period
	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Long-term debt obligations	$	233	$	51	$	106	$	76	$	—
Interest obligations on long-term debt (a)		20		8		10		2		—
Operating lease obligations		3,895		680		1,019		822		1,374
Purchase obligations Warranty reserve obligations		596 23		596 23		— —		— —		— —

Total	$	4,767	$	1,358	$	1,135	$	900	$	1,374

(a)	This line item was calculated by utilizing the effective rate on outstanding debt as of February 28, 2015.

Critical Accounting Estimates

Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations are based upon the Company’s consolidated financial statements. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). These principles require the use of estimates and assumptions that affect amounts reported and disclosed in the consolidated financial statements and related notes. The accounting policies that may involve a higher degree of judgments, estimates, and complexity include reserves on inventories, the allowance for bad debts, contract revenue recognition as well as profitability or loss recognition estimates, warranty reserves and the sufficiency of the valuation reserve relating to deferred tax assets. The Company uses the following methods and assumptions in determining its estimates:

Reserves on inventories

There have been significant changes in management’s estimates in fiscal 2015 and 2014 due to the rapidly changing business conditions in the display markets and the Company adjusted its reserves based on the remaining inventories and the remaining businesses it operates. The Company cannot guarantee the accuracy of future forecasts since these estimates are subject to change based on market conditions.

Revenue recognition

Revenues are recognized when there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable and collectability can be reasonably assured. The Company’s delivery term typically is F.O.B. shipping point.

In accordance with Financial Accounting Standards Board (“FASB’) Accounting Standards Codification (“ASC’) Topic 605-45 “ Revenue Recognition: Principal Agent Considerations”, shipping and handling fees billed to customers are classified in net sales in the consolidated statements of income. Shipping and handling costs incurred for the delivery of product to customers are classified in selling and delivery in the consolidated statements of income.

A portion of the Company’s revenue is derived from contracts to manufacture display systems to a buyer’s specification. These contracts are accounted for under the provisions of FASB ASC Topic 605-35 “ Revenue Recognition : Construction-Type and Production-Type Contracts ”. These contracts are fixed-price and cost-plus contracts and are recorded on the percentage of completion basis using the ratio of costs incurred to estimated total costs at completion as the measurement basis for progress toward completion and revenue recognition. Any losses identified on contracts are recognized immediately. Contract accounting requires significant judgment relative to assessing risks, estimating contract costs and making related assumptions for schedule and technical issues. With respect to contract change orders, claims, or similar items, judgment must be used in estimating related amounts and assessing the potential for realization. These amounts are only included in contract value when they can be reliably estimated and realization is probable.

Allowance for bad debts

The allowance for bad debts is determined by reviewing all accounts receivable and applying credit loss experience to the current receivable portfolio with consideration given to the current condition of the economy, assessment of the financial position of the creditors as well as payment history and overall trends in past due accounts compared to established thresholds. The Company monitors credit exposure and assesses the adequacy of the allowance for bad debts on a regular basis. Historically, the Company’s allowance has been sufficient for any customer write-offs. Although the Company cannot guarantee future results, management believes its policies and procedures relating to customer exposure are adequate.

Warranty reserves

The warranty reserve is determined by recording a specific reserve for known warranty issues and a reserve based on claims experience. The Company considers actual warranty claims compared to net sales, then adjusts its reserve liability accordingly. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Management feels that historically its procedures have been adequate and does not anticipate that its assumptions are reasonably likely to change in the future.

Other loss contingencies

Other loss contingencies are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss can reasonably be estimated. 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.

Intangible and Other Long-Term Assets

If the Company determines it is more likely than not that the fair value of an intangible asset is less than the carrying value, then it applies the processes prescribed in FASB ASC Topic 350 “Intangible Assets” and FASB ASC Topic 360 “Property, Plant, and Equipment”. We make certain estimates and projections in connection with impairment analyses for intangible assets. If these estimates or projections change or prove incorrect, we may be required to record impairment charges. If these impairment charges were significant, our consolidated financial position or results of operations would be adversely affected. Management has assessed the Company’s intangible assets and has not recognized any impairment of assets for the twelve months ended February 28, 2015 and February 28, 2014.

Income Taxes

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. The Company has established a valuation allowance of $4.3 million on the Company’s current and non-current deferred tax assets.

The Company accounts for uncertain tax positions under the provisions of ASC Topic 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 February 28, 2015, the Company did not record any liabilities for uncertain tax positions.

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements. Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to continue as a Going Concern”. Currently, there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This update requires that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable.) This update is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is still evaluating the effects that the adoption of this update will have on the Company’s consolidated financial position or results of operations.

In May, 2014, the FASB issued ASU 2014-09 “Revenue with Contracts from Customers”. ASU 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) . The new guidance (i) removes inconsistencies, and weaknesses in revenue requirements, (ii) provides a more robust framework for addressing revenue issues, (iii) improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (iv) provides more useful information to users of financial statements through improved disclosure requirements, and (v) simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.

The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period; however, a one year delay has been proposed. The Company is still evaluating the effects that the adoption of this update will have on the Company’s consolidated financial position or results of operations.

In April 2014, the FASB issued Accounting Standards Update No (ASU 2014-08), “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. Under the new guidance, a discontinued operation is defined as: (i) a disposal of a component or group of components that is disposed of or is classified as held for sale that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results or (ii) an acquired business or nonprofit activity that is classified as held for sale on the date of acquisition. The guidance states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Under the current U.S. GAAP, an entity is prohibited from reporting a discontinued operation if it has certain continuing cash flows or involvement component after the disposal. The new guidance eliminates these criteria.

The standard expands the disclosures for discontinued operations and requires new disclosures related to individually material disposals that do not meet the definition of a discontinued operation, an entity’s continuing involvement with a discontinued operation following the disposal date and retained equity method investments in a discontinued operation. The guidance is effective for annual periods beginning on or after December 15, 2014 and interim periods within that year. The Company does not expect the adoption of this update to have a significant effect on the Company’s consolidated financial position or results of operations.

Impact of Inflation

Inflation has not had a material effect on the Company’s results of operations to date.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

The Company’s primary market risks include changes in technology and government spending. The rapid advances in video and projection technology present a challenge for the Company’s management and engineers to be able to meet the ever changing demands in the markets in which it operates. The Company did a significant amount of business with the government (41% of revenues) in fiscal 2015. Failure of the government to continue to fund programs in the Company’s markets could have a detrimental effect on the Company.

Item 8. Financial Statements and Supplementary Data.

Video Display Corporation and Subsidiaries

Index to Consolidated Financial Statements


Report of Independent Registered Public Accounting Firm			19

Consolidated Balance Sheets as of February 28, 2015 and February 28, 2014			20

Consolidated Statements of Operations for the years ended February 28, 2015 and February 28, 2014			22

Consolidated Statements of Shareholders’ Equity for the years ended February 28, 2015 and February 28, 2014			23

Consolidated Statements of Cash Flows for the years ended February 28, 2015 and February 28, 2014			24

Notes to Consolidated Financial Statements			25

Report of Independent Registered Public Accounting Firm

To the Board of Directors

Video Display Corporation

We have audited the accompanying consolidated balance sheets of Video Display Corporation and subsidiaries (the “Company”) as of February 28, 2015 and 2014, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended February 28, 2015. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Video Display Corporation and subsidiaries as of February 28, 2015 and 2014, and the results of their operations and their cash flows for each of the years in the two-year period ended February 28, 2015, in conformity with accounting principles generally accepted in the United States of America.

/s/ Carr, Riggs & Ingram, LLC

Atlanta, Georgia

May 29, 2015

Video Display Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands)


	February 28,			February 28,
	2015			2014
Assets
Current Assets
Cash and cash equivalents	$	62		$	2,299
Restricted cash		—			1,200
Trading investments, at fair value		2,516			4,914
Accounts receivable, less allowance for bad debts of $52 and $40, respectively		1,504			1,876
Note receivable		32			1,000
Inventories, net		7,005			9,915
Deferred income taxes Income taxes refundable		— 720			242 1,120
Prepaid expenses and other current assets		61			182
Assets of discontinued operations		2,831			—

Total current assets		14,731			22,748

Property, plant and equipment:
Land		154			154
Buildings		2,593			2,589
Machinery and equipment		7,282			7,249

		10,029			9,992
Accumulated depreciation		(8,658	)		(8,431	)

Net property, plant and equipment		1,371			1,561

Note receivable		1,070			1,698
Intangible assets, net		559			684
Deferred income taxes		—			760
Other assets		29			29
Assets of discontinued operations		70			—

Total assets	$	17,830		$	27,480

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

Video Display Corporation and Subsidiaries

Consolidated Balance Sheets

(in thousands)


	February 28, 2015			February 28, 2014
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	719		$	946
Accrued liabilities		603			925
Current maturities of long-term debt		50			48
Liabilities of discontinued operations		1,145			—

Total current liabilities		2,517			1,919
Long-term debt, less current maturities		183			233
Deferred rent		420			540
Unrecognized gain on sale of assets		—			554

Total liabilities		3,120			3,246

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 5,962 outstanding at February 28, 2015, and 9,732 issued and 7,020 outstanding at February 28, 2014		7,293			7,293
Additional paid-in capital		170			160
Retained earnings		23,399			29,392
Treasury stock, 3,770 shares at February 28, 2015 and 2,712 shares at February 28, 2014, at cost		(16,152	)		(12,611	)

Total shareholders’ equity		14,710			24,234

Total liabilities and shareholders’ equity	$	17,830		$	27,480

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

Video Display Corporation and Subsidiaries

Consolidated Statements of Operations

(in thousands, except per share data)


	February 28, 2015			February 28, 2014
Net sales	$	12,818		$	14,411
Cost of goods sold		11,433			15,489

Gross profit (loss)		1,385			(1,078	)

Operating expenses
Selling and delivery		1,115			1,686
General and administrative		3,789			3,061

		4,904			4,747

Operating loss		(3,519	)		(5,825	)

Other income (expense)
Interest income(expense)		15			(714	)
Other, net		(1,253	)		593

Total other income (expense)		(1,238	)		(121	)

Loss from continuing operations before income taxes		(4,757	)		(5,946	)
Income tax expense		1,280			(486	)

Net loss from continuing operations	$	(6,037	)	$	(5,460	)
Income from discontinued operations, net of income tax expense		44			2,779

Net (loss)	$	(5,993	)	$	(2,681	)

Net income (loss) per share:
From continuing operations-basic	$	(0.95	)	$	(0.72	)

From continuing operations-diluted		(0.95	)		(0.72	)

From discontinued operations-basic	$	0.01		$	0.37

From discontinued operations-diluted		0.01			0.37

Average shares outstanding – basic		6,384			7,557

Average shares outstanding – diluted		6,393			7,582

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

Video Display Corporation and Subsidiaries

Consolidated Statements of Shareholders’ Equity

(in thousands)


	Common Shares*			Share Amount		Additional Paid-in Capital		Retained Earnings			Treasury Stock
Balance, February 28, 2013		7,566			7,293		116		32,073			(10,574	)
Net loss		—			—		—		(2,681	)		—
Stock grant		27			—		36		—			129
Repurchase of treasury stock		(573	)									(2,166	)
Share based compensation		—			—		8		—			—

Balance, February 28, 2014		7,020			7,293		160		29,392			(12,611	)
Net loss		—			—		—		(5,993	)		—
Repurchase of treasury stock		(1,058	)									(3,541	)
Share based compensation		—			—		10		—			—

Balance, February 28, 2015		5,962		$	7,293	$	170	$	23,399		$	(16,152	)

*	Common Shares are shown net of Treasury Shares

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

Video Display Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(in thousands)


	February 28, 2015			February 28, 2014
Operating Activities
Net loss	$	(5,993	)	$	(2,681	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Income from discontinued operations, net of tax		(44	)		(168	)
Gain on sales of subsidiaries, net of tax		—			(2,611	)
Depreciation and amortization		378			394
Provision for doubtful accounts		27			30
Provision for inventory reserve		519			658
Non-cash charge for share based compensation		10			8
Deferred income taxes		1,003			1,876
Gain on disposal of assets		(364	)		(400	)
Realized/unrealized (gain) loss on investments		2,034			(8	)
Other		(10	)		166
Changes in working capital items:
Accounts receivable		(111	)		1,194
Inventories		2,392			600
Note receivable		(95	)		—
Prepaid expenses and other assets		103			3,648
Accounts payable and accrued liabilities		(548	)		(1,516	)
Deferred revenue		(120	)		540
Cost, estimated earnings and billings, net on uncompleted contracts		—			67
Income taxes refundable/payable		377			(703	)

Net cash provided by (used in) operating activities		(442	)		1,094

Investing Activities
Capital expenditures		(63	)		(79	)
Proceeds from sale of property, plant & equipment		500			499
Cash advances to discontinued operations		(315	)		—
Proceeds from sale of subsidiaries		—			23,690
Purchases of investments		(78,847	)		(9,529	)
Proceeds from sale of investments		75,089			4,648

Net cash provided by (used in) investing activities		(3,636	)		19,229

Financing Activities
Proceeds from long-term debt, lines of credit		—			14,054
Repayments of long-term debt, lines of credit		(48	)		(28,591	)
Payments received from notes receivable		100			—
Purchase of treasury stock		(3,542	)		(2,166	)
Proceeds from marginal float		4,130			—
Proceeds from notes payable to officers and directors		—			250
Repayments of notes payable to officers and directors		—			(750	)

Net cash provided by (used in) financing activities		640			(17,203	)
Discontinued Operations
Operating activities		(204	)		193
Investing activities		—			(62	)
Financing activities		315			—

Net cash provided by discontinued operations		111			131
Net change in cash and cash equivalents		(3,327	)		3,251
Cash and cash equivalents, beginning of year		3,499			381

Cash and cash equivalents, end of year		172			3,632
Cash and cash equivalents, discontinued operations		110			133

Cash and cash equivalents, continuing operations	$	62		$	3,499

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

See Note 11 for supplemental cash flow information.

Notes to Consolidated Financial Statements

Note 1. Summary of Significant Accounting Policies

Fiscal Year

All references herein to “2015” and “2014” mean the fiscal years ended February 28, 2015 and 2014, respectively. Unless otherwise noted, these policies and disclosures pertain to our continuing operations.

Nature of Business

Video Display Corporation and subsidiaries (the “Company”, “our” or “we”) is a provider and manufacturer of video products, components, and systems for data display and presentation of electronic information media in various requirements and environments. The Company designs, engineers, manufactures, markets, distributes and installs technologically advanced display products and systems, from basic components to turnkey systems for government, military, aerospace, medical and commercial organizations.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of all intercompany accounts and transactions.

Basis of Accounting

“The FASB Accounting Standards Codification” (“FASB ASC”) establishes the source of authoritative accounting standards generally accepted in the United States of America (“U.S. GAAP) recognized by the Financial Accounting Standards Board (“FASB”) to be applied by nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB amends the FASB ASC through Accounting Standards Updates (“ASUs”). ASCs and ASUs are referred to throughout these consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Examples include provisions for returns, warranty reserves, bad debts, inventory reserves, valuations on deferred income tax assets, other intangible assets, accounting for percentage of completion contracts and the length of product life cycles and fixed asset lives. Actual results could vary from these estimates.

Banking and Liquidity

The accompanying 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. Due to operating losses during the years ended February 28, 2015 and 2014 and the inability to generate cash flows from operations during the year ended February 28, 2015, management assessed the Company’s ability to continue as a going concern. The Company has a $13.1 million working capital balance at February 28, 2015, including $2.6 million in liquid assets and management believes that this is adequate to fund the current level of business for a reasonable period of time. In addition to its current position, the Company is examining possibilities to improve operations through reduced overhead costs by co-locating certain operations and through improved revenues with an enhanced sales strategy. There could be an impact on working capital requirements to fund this growth. As in the past, the intent is to finance such projects with current working capital and operating cash flows; however, more permanent sources of capital may be required in certain circumstances. There can be no assurance, however, that we will be able to implement our strategies or obtain additional financing under favorable terms, if needed.

Revenue Recognition

Revenues are recognized when there is persuasive evidence of an arrangement, delivery has occurred, the price has been fixed or is determinable and collect-ability can be reasonably assured. The Company’s delivery term typically is F.O.B. shipping point.

In accordance with FASB ASC Topic 605-45 “Revenue Recognition: Principal Agent Considerations”, shipping, and handling fees billed to customers are classified in net sales in the consolidated statements of operations. Shipping and handling costs incurred are classified in selling and delivery in the consolidated statements of operations. Shipping costs of $0.2 million and $0.1 million were included in the fiscal years ended 2015 and 2014, respectively.

Research and Development

The Company includes research and development expenditures in the consolidated financial statements as a part of general and administrative expenses. Research and development costs were approximately $0.1 million in the fiscal year ended 2015 and $0.3 in the fiscal year ended 2014.

Cash and Cash Equivalents and Investments

All highly liquid investments with a maturity date of three months or less at the date of purchase are considered to be cash equivalents. Investment securities that are held by the Company, are bought and held principally for the purpose of selling them in the near term, are classified as “trading” and principally consist of equity securities and mutual funds. These trading investments are carried at fair value with realized gains or losses and changes in fair value included in operations. Unrealized gains and (losses) approximated ($2.8) million in fiscal 2015 and $0.1 million in fiscal 2014.

Fair Value Measurements and Financial Instruments

The FASB’s fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The guidance describes three levels of inputs that may be used to measure fair value:


Level 1		Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2		Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3		Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets measured at fair value on a recurring basis by the Company consist of investment securities held for trading using Level 1 inputs. The following table sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of February 28, 2015 and February 28, 2014 (in thousands):


	February 28, 2015			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Stocks, options, and ETF (long)		6,308			6,308			—		—
Stocks, options, and ETF (short)		(10	)		(10	)		—		—
Mutual Funds		226			226			—		—

Total value of investments	$	6,524		$	6,524			—		—
Current Liabilities:
Margin balance		(4,008	)		(4,008	)		—		—

Total value of liabilities		(4,008	)		(4,008	)		—		—

Total	$	2,516		$	2,516			—		—


	February 28, 2014			Level 1 Assets and Liabilities			Level 2 Assets and Liabilities		Level 3 Assets and Liabilities
Current trading investments:
Other		123			123
Stocks, options, and ETF (long)		4,764			4,764			—		—
Stocks, options, and ETF (short)		(112	)		(112	)		—		—
Mutual Funds		139			139			—		—

Total value of investments	$	4,913		$	4,913			—		—

Total	$	4,914		$	4,914			—		—

The Company’s financial instruments which are not measured at fair value on the consolidated balance sheets include cash, accounts receivable, short-term liabilities, and debt. The estimated fair value of these financial instruments were determined using Level 2 inputs and approximate cost due to the short period of time to maturity. Recorded amounts of long-term debt are considered to approximate fair value due to either rates that fluctuate with the market or are otherwise commensurate with the current market.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are customer obligations due under normal trade terms. The Company sells its products primarily to general contractors, government agencies, manufacturers, and consumers of video displays and CRTs. Management performs continuing credit evaluations of its customers’ financial condition and although the Company generally does not require collateral, letters of credit may be required from its customers in certain circumstances, such as foreign sales. The allowance for doubtful accounts is determined by reviewing all accounts receivable and applying credit loss experience to the current receivable portfolio with consideration given to the current condition of the economy, assessment of the financial position of the creditors as well as payment history and overall trends in past due accounts compared to established thresholds. The Company monitors credit exposure and assesses the adequacy of the allowance for doubtful accounts on a regular basis. Historically, the Company’s allowance has been sufficient for any customer write-offs. Management believes accounts receivable are stated at amounts expected to be collected.

The following is a roll-forward of the Allowance for Doubtful Accounts (in thousands):


			Additions:
Description	Balance at Beginning of Period		Charged to Costs and Expenses		Deductions		Balance at End of Period
February 28, 2015	$	40	$	27	$	15	$	52
February 28, 2014		21		30		11		40

Warranty Reserves

The Company records, under the provisions of FASB ASC Topic 460-10-25 “Guarantees: Recognition”, a liability for estimated warranty obligations at the date products are sold. Adjustments are made as new information becomes available.

The warranty reserve is determined by recording a specific reserve for known warranty issues and a general reserve based on historical claims experience. The Company considers actual warranty claims compared to net sales, then adjusts its reserve liability accordingly. Actual claims incurred could differ from the original estimates, requiring adjustments to the reserve. Management believes that historically its procedures have been adequate and does not anticipate that its assumptions are reasonably likely to change in the future.

Inventories

Inventories consist primarily of CRTs, electron guns, monitors, digital projectors, video components and electronic parts. Inventories are stated at the lower of cost (primarily first-in, first-out) or market.

Reserves on inventories result in a charge to operations when the estimated net realizable value declines below cost. Management regularly reviews the Company’s investment in inventories for declines in value and establishes reserves when it is apparent that the expected net realizable value of the inventory falls below its carrying amount. Management considers the projected demand for its products in this estimate of net realizable value. Management is able to forecast the usage of its products from buying trends of its customers and the open sales orders from customers. Thus, the Company is able to adjust inventory-stocking levels according to the projected demand. Management reviews inventory levels on a quarterly basis. Such reviews include observations of product development trends of the Original Equipment Manufacturers (OEMs), new products being marketed, and technological advances relative to the product capabilities of the Company’s existing inventories. Management believes that due to rapid changes in display technology much of the CRT inventory has become obsolete and $1.8 million of the CRT inventory was written-off in fiscal year 2014. The Company increased the inventory reserves $0.5 million in the fiscal year ending February 28, 2015 and disposed of an additional $0.3 million of which $0.1 million was included in the reserves in various raw material parts and demo equipment at its VDC Display division during the current fiscal year 2015 to bring in line with its estimates of the value of the inventory. There have been no other significant changes in management’s estimates in fiscal 2015 and 2014; however, the Company cannot guarantee the accuracy of future forecasts since these estimates are subject to change based on market conditions.

Property, Plant and Equipment

Property, plant, and equipment are stated at cost. Depreciation is computed principally by the straight-line method for financial reporting purposes over the following estimated useful lives: Buildings – ten to twenty-five years; Machinery and Equipment – five to ten years. Depreciation expense totaled approximately $253 thousand and $268 thousand for the fiscal years ended 2015 and 2014, respectively. Substantial betterments to property, plant, and equipment are capitalized and routine repairs and maintenance are expensed as incurred.

Management reviews and assesses long-lived assets, which includes property, plant, and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, management estimates the future cash flows expected to result from the use of the asset. If the sum of the undiscounted expected cash flows is less than the carrying amount of the asset, an impairment loss is recognized based upon the estimated fair value of the asset.

Intangibles

Amortizable intangible assets consist primarily of customer lists related to acquisitions. Intangible assets are amortized using the straight-line method over their estimated period of benefit. The Company identifies and records impairment losses on intangible assets when events and circumstances indicate that such assets might be impaired. No impairment of intangible assets has been identified during either of the periods presented.

Stock-Based Compensation Plans

The Company accounts for employee share-based compensation under the fair value method and uses an option pricing model for estimating the fair value of stock options at the date of grant as required by FASB ASC Topic 718-10-30, “Compensation – Stock Compensation: Initial Measurement”. For the fiscal years ended February 28, 2015 and 2014, the Company recognized immaterial amounts of share-based compensation in general and administrative expense; the liability for the share-based compensation recognized is presented in the consolidated balance sheet as part of additional paid in capital. As of February 28, 2015, total unrecognized compensation costs related to stock options and shares of restricted stock granted was $10.0 thousand. The amount of unrecognized share based compensation cost is expected to be recognized ratably over a period of approximately one year.

Stock Repurchase Program

The Company has a stock repurchase program, pursuant to which it had 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 in the open market. There is no minimum number of shares required to be repurchased under the program. During the fiscal year ended February 28, 2014, the Company repurchased 572,597 shares at an average price of $3.78 per share and during the fiscal year ended February 28, 2015, the Company repurchased 1,058,459 shares at an average price of $3.35 per share, which were added to treasury shares on the consolidated balance sheet. Under this program, an additional 574,050 shares remain authorized to be repurchased by the Company at February 28, 2015.

Income Taxes

The Company accounts for income taxes under the asset and liability method prescribed in FASB ASC Topic 740, “Income Taxes”, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than possible enactments of changes in the tax laws or rates.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.

Deferred income taxes as of February 28, 2015 and 2014 reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and certain tax loss carryforwards, less any valuation allowance.

The Company accounts for uncertain tax positions as required in that a position taken or expected to be taken in a tax return is recognized in the consolidated financial statements when it is more likely than not (i.e., a likelihood of more than fifty percent) that the position would be sustained upon examination by tax authorities. A recognized tax position is then measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. As of February 28, 2015 and 2014 the Company did not have any material unrecognized tax benefits.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as components of interest expense and other expense, respectively, in arriving at pretax income. The Company did not have any interest and penalties accrued as of February 28, 2015 and 2014.

The Company’s tax years ended February 28, 2014, 2013, and 2012 remain open to examination by the Internal Revenue Service (“IRS”).

Earnings (Loss) per Share

Basic earnings (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted average number of common shares outstanding during each year. Shares issued or repurchased during the year are weighted for the portion of the year that they were outstanding. Diluted earnings per share is calculated in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive common shares that were outstanding during the period.

The following is a reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share for 2015 and 2014, (in thousands, except for per share data):


	Net Income (loss)			Average Shares Outstanding		Net Income(loss) Per Share
2015
Basic-continuing operations	$	(6,037	)		6,384	$	(0.95	)
Basic-discontinued operations		44			6,384		0.01
Effect of dilution:
Options		—			9		0.00

Diluted earnings per share	$	(5,993	)		6,393	$	(0.94	)

2014
Basic-continuing operations	$	(5,460	)		7,557	$	(0.72	)
Basic-discontinued operations		2,779			7,557		0.37
Effect of dilution:
Options		—			25		0.00

Diluted earnings per share	$	(2,681	)		7,582	$	(0.35	)

Stock options, debentures, and other liabilities convertible into 73,000 and 38,000 shares, respectively, of the Company’s common stock were anti-dilutive and, therefore, were excluded from the fiscal 2015 and 2014 diluted earnings (loss) per share calculation.

Segment Reporting

The Company applies FASB ASC Topic 280, “Segment Reporting” to report information about operating segments in its annual and interim financial reports. An operating segment is defined as a component that engages in business activities, whose operating results are reviewed by the chief operating decision maker in order to make decisions about allocating resources, and for which discrete financial information is available. We operate and manage our business as one reportable segment. All of our divisions have similarities such as products and markets served; therefore, we believe they meet the criteria for aggregation under the applicable authoritative guidance and, as such, these operations are reported as one segment within the Consolidated Financial Statements.

Sales to foreign customers were 15% of consolidated net sales for fiscal 2015 and 10% for fiscal 2014.

Recent Accounting Pronouncements

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements. Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to continue as a Going Concern”. Currently, there is no guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. This update requires that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable.) This update is effective for the annual period after December 15, 2016, and for annual periods and interim periods thereafter. The Company is still evaluating the effects that the adoption of this update will have on the Company’s consolidated financial position or results of operations.

In May, 2014, the FASB issued ASU 2014-09 “Revenue with Contracts from Customers”. ASU 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and IFRS. The new guidance (i) removes inconsistencies, and weaknesses in revenue requirements, (ii) provides a more robust framework for addressing revenue issues, (iii) improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets, (iv) provides more useful information to users of financial statements through improved disclosure requirements, and (v) simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer.

The guidance is effective for annual reporting periods beginning after December 15, 2016 including interim periods within that reporting period; however, a one-year delay has been proposed. The Company is still evaluating the effects that the adoption of this update will have on the Company’s consolidated financial position or results of operations.

In April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”. ASU 2014-08 changes the criteria for determining which disposals can be presented as discontinued operations and modified related disclosure requirements. Under the new guidance, a discontinued operation is defined as: (i) a disposal of a component or group of components that is disposed of or is classified as held for sale that represents a strategic shift that has or will have a major effect on an entity’s operations and financial results or (ii) an acquired business or nonprofit activity that is classified as held for sale on the date of acquisition. The standard states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. Under the current U.S. GAAP, an entity is prohibited from reporting a discontinued operation if it has certain continuing cash flows or involvement component after the disposal. The new guidance eliminates these criteria.

Note 2. Intangible Assets

Intangible assets consist primarily of the unamortized value of purchased patents/designs, customer lists, non-compete agreements and miscellaneous other intangible assets. Intangible assets are amortized over the period of their expected lives, generally ranging from five to 15 years. Amortization expense related to intangible assets was $125 thousand for fiscal 2015 and $126 thousand for fiscal 2014. As of February 28, 2015 and February 28, 2014, the cost and accumulated amortization of intangible assets was as follows (in thousands):


	February 28, 2015				February 28, 2014
	Cost		Accumulated Amortization		Cost		Accumulated Amortization
Patents/designs	$	233	$	233	$	233	$	225
Customer lists		2,863		2,304		2,863		2,187
Non-compete agreements		1,000		1,000		1,000		1,000
Other intangibles		6		6		6		6

	$	4,102	$	3,543	$	4,102	$	3,418

Expected amortization expense for the next five years and thereafter is as follows (in thousands):


Year	Amortization Expense
2016	$	117
2017	$	117
2018	$	117
2019	$	117
2020	$	91

Note 3. Inventories

Inventories consisted of the following (in thousands):


	February 28,			February 28,
	2015			2014
Raw materials	$	5,309		$	7,906
Work-in-process		438			242
Finished goods		1,751			1,878

		7,498			10,026
Reserves for obsolescence		(493	)		(111	)

	$	7,005		$	9,915

During fiscal 2015, the Company disposed of inventories of $0.3 million of which none was previously reserved for through inclusion in the inventory reserve. During fiscal 2014, the Company disposed of inventories of $5.3 million of which $3.2 million was previously reserved for through inclusion in the inventory reserve.

The following is a roll forward of the Inventory Reserves (in thousands):


Description	Balance at Beginning of Period		Additions: Charged to Costs and Expenses		Deductions		Balance at End of Period
February 28, 2015	$	111	$	519	$	137	$	493
February 28, 2014		2,679		658		3,226		111

Note 4. Lines of Credit and Long-Term Debt

In fiscal 2014, with the sale of the Company’s Aydin Displays, Inc and Z-Axis, Inc. subsidiaries, the Company repaid all remaining bank debt, which included a line of credit and two term loans, totaling approximately $14.0 million. Currently, the only remaining debt of the Company is $0.2 million it owes on a building owned by its subsidiary, Teltron Technologies, Inc. in Birdsboro, PA.

The Company had outstanding margin account borrowing of $4.0 million as of February 28, 2015. The Company had no margin account borrowing as of February 28, 2014. The margin account borrowings are used to purchase marketable equity securities and are netted against the investments in the balance sheet to show net trading investments. The gross investments as of February 28, 2015 were $6.5 million leaving net investments of $2.5 million after the margin account borrowings of $4.0 million. The margin interest rate is 2%.

Long-term debt consisted of the following (in thousands):


	February 28, 2015			February 28, 2014
Mortgage payable to bank; interest rate at Community Bank base rate plus 0.5% (3.75% as of February 28, 2015); monthly principal and interest payments of $5 thousand payable through October 2021; collateralized by land and building of Teltron Technologies, Inc.		233			281

		233			281
Less current maturities		(50	)		(48	)

	$	183		$	233

Future maturities of lines of long-term debt are as follows (in thousands):


Year	Amount
2016	$	50
2017		53
2018		54
2019		56
2020		20

	$	233

Note 5. Accrued Expenses and Warranty Obligations

The following provides a reconciliation of changes in the Company’s warranty reserve for fiscal years 2015 and 2014. The Company provides no other guarantees.


	2015			2014
Balance at beginning of year	$	45		$	43
Provision for current year sales		57			116
Warranty costs incurred		(79	)		(114	)

Balance at end of year	$	23		$	45

Accrued liabilities consisted of the following (in thousands):


	February 28, 2015		February 28, 2014
Accrued compensation and benefits	$	203	$	313
Accrued customer deposits		107		—
Accrued warranty		23		45
Accrued professional fees		149		136
Accrued other		121		431

	$	603	$	925

Note 6. Stock Options

Upon recommendation of the Board of Directors of the Company, on August 25, 2006, the shareholders of the Company approved the Video Display Corporation 2006 Stock Incentive Plan (“Plan”), whereby options to purchase up to 500,000 shares of the Company’s common stock may be granted and up to 100,000 restricted common stock shares may be awarded. Options may not be granted at a price less than the fair market value, determined on the day the options are granted. Options granted to a participant who is the owner of ten percent or more of the common stock of the Company may not be granted at a price less than 110% of the fair market value, determined on the day the options are granted. The exercise price of each option granted is fixed and may not be re-priced. The life of each option granted is determined by the plan administrator, but may not exceed the lesser of seven years from the date the participant has the vested right to exercise the option, or nine years from the date of the grant. The life of an option granted to a participant who is the owner of ten percent or more of the common stock of the Company may not exceed five years from the date of grant. All full-time or part-time employees, and Directors of the Company, are eligible for participation in the Plan. In addition, any consultant or advisor who renders bona fide services to the Company, other than in connection with the offer or sale of securities in a capital-raising transaction, is eligible for participation in the Plan. The plan administrator is appointed by the Board of Directors of the Company, and must include two or more outside, independent Directors of the Company. The Plan may be terminated by action of the Board of Directors, but in any event will terminate on the tenth anniversary of its effective date.

Prior to expiration on May 1, 2006, the Company maintained an incentive stock option plan whereby options to purchase up to 1.2 million shares could be granted to directors and key employees at a price not less than fair market value at the time the options were granted. Upon vesting, options granted are exercisable for a period not to exceed ten years. No further options may be granted pursuant to the plan after the expiration date; however, those options outstanding at that date will remain exercisable in accordance with their respective terms.

Information regarding the stock option plans is as follows:


	Number of Shares (in thousands)			Average Exercise Price Per Share
Outstanding at February 28, 2013		62		$	4.50
Granted		19			3.83
Forfeited or expired		(9	)		4.19

Outstanding at February 28, 2014		72		$	4.37
Granted		19			2.82
Forfeited or expired		(18	)		3.83

Outstanding at February 28, 2015		73		$	4.10
Options exercisable
February 28, 2014		53		$	4.56
February 28, 2015		53			4.55


			Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding at February 28, 2015 (in thousands)		Weighted Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable at February 28, 2015 (in thousands)		Weighted Average Exercise Price
$2.44 - 2.44		9		3.0	$	2.44		0	$	2.44
3.20 - 3.27		17		5.9		3.18		7		3.20
3.59 - 3.65		18		3.0		3.62		18		3.62
4.00 - 4.20		18		5.6		4.11		8		4.00
7.65 - 7.71		11		1.8		7.68		11		7.68

		73		4.1	$	4.10		44	$	4.66

The Company estimates the fair value of stock options granted using the Black-Scholes option-pricing model, which requires the Company to estimate the expected term of the stock option grants and expected future stock price volatility over the term. The term represents the expected period of time the Company believes the options will be outstanding based on historical information. Estimates of expected future stock price volatility are based on the historic volatility of the Company’s common stock. The Company calculates the historic volatility based on the weekly stock closing price, adjusted for dividends and stock splits. The fair value of the stock options is based on the stock price at the time the option is granted, the annualized volatility of the stock and the discount rate at the grant date.

Note 7. Taxes on Income

Provision (benefit) for income taxes in the consolidated statements of income consisted of the following components (in thousands):


	Fiscal Year Ended
	February 28, 2015			February 28, 2014
Current:
Federal	$	391		$	(2,337	)
State		(114	)		(25	)

		277			(2,362	)

Deferred:
Federal		883			1,632
State		120			244

		1,003			1,876

Total	$	1,280		$	(486	)

The provision for income taxes differs from the amount computed by applying the federal statutory rate of 34% to income before income taxes as follows (in thousands):


	Fiscal Year Ended
	February 28, 2015			February 28, 2014
Statutory U.S. federal income tax rate	$	(1,327	)	$	(2,022	)
State income taxes, net of federal benefit		(114	)		(69	)
Research and experimentation credits		(15	)		(50	)
Valuation allowance		2,739			1,556
Non-deductible expenses		19			12
Other		(22	)		87

Taxes at effective income tax rate	$	1,280		$	(486	)

The income tax expense effective tax rate for fiscal 2015 was 27% compared to 8% for fiscal 2014. The higher effective rate in 2015 compared to the effective rate in 2014 was primarily due to the valuation allowance the Company recognized on deferred tax benefits not expected to be realized, research and experimentation credits, the unrealized loss on investments and various other permanent items.

The deferred tax assets were reduced by a valuation allowance because in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company has determined that a valuation allowance is needed due to recent taxable net operating losses, the sale of profitable divisions and the limited taxable income in the carry back periods.

The sources of the temporary differences and carry forwards, and their effect on the net deferred tax asset consisted of the following (in thousands):


	Fiscal Year Ended
	February 28,			February 28,
	2015			2014
Current deferred tax assets (liabilities):
Uniform capitalization costs	$	123		$	159
Inventory reserves		183			41
Accrued liabilities		119			59
Allowance for doubtful accounts		19			15
Other		(10	)		(32	)
Valuation Allowance		(434	)		—

Net current deferred tax assets		—			242
Non-current deferred tax assets:
Amortization of intangibles		185			241
Deferred rent		155			200
Unrealized loss on investments		1,035			—
State net operating loss carry-forward		381			351
Federal net operating loss carry-forward		1,908			1,369
Foreign tax credit carry-forward		99			99
Basis difference of property, plant and equipment		97			56
Valuation allowance		(3,860	)		(1,556	)

Net non-current deferred tax assets		—			760

Net deferred tax assets	$	—		$	1,002

Current asset Non-current asset	$	— —		$	242 760

	$	—		$	1,002

The Company has available federal and state net operating loss carryforwards of $1.9 million and $0.3 million, respectively. The net operating loss carryforwards expire in fiscal 2035, if not used.

Note 8. Benefit Plan

The Company maintains defined contribution plans that are available to all employees. The Company did not make a contribution in the fiscal year ended February 28, 2015 or February 28, 2014 to the Company’s 401(k) plan.

Note 9. Commitments and Contingencies

Operating Leases

The Company leases various manufacturing facilities and transportation equipment under leases classified as operating leases, expiring at various dates through 2025. These leases provide that the Company pay taxes, insurance, and other expenses on the leased property and equipment. Rent expense for all leases was approximately $0.8 million and $0.8 million in fiscal 2015 and 2014, respectively.

Future minimum rental payments due under these leases are as follows (in thousands):


Fiscal Year	Amount
2016	$	680
2017		510
2018		509
2019		424
2020		398
Thereafter		1,374

	$	3,895

Related Party Leases

Included above are leases for manufacturing and warehouse facilities leased from the Company’s chief executive officer and Ordway Properties, LLC under operating leases expiring at various dates through 2025. Rent expense under these leases totaled approximately $314 thousand in fiscal 2015 and 2014.

Future minimum rental payments due under these leases with related parties are as follows (in thousands):


Fiscal Year	Amount
2016	$	504
2017		504
2018		504
2019		418
2020		394
Thereafter		1,374

	$	3,698

Legal Proceedings

The Company is involved in various legal proceedings relating to claims arising in the ordinary course of business. Management is of the opinion, that the ultimate resolution of these matters will not have a material adverse effect on the Company’s business, consolidated financial condition, results of operation or cash flows.

Note 10. Concentrations of Risk and Major Customers

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash, accounts receivable and investments. At times, such cash in banks are in excess of the FDIC insurance limit.

The Company sells to a variety of domestic and international customers on an open-unsecured account basis, in certain cases requiring letters of credit. These customers principally operate in the medical, military, and avionics industries. The Company had direct and indirect net sales to the U.S. government, primarily the Department of Defense for training and simulation programs, which comprised approximately 41% and 28% of consolidated net sales in fiscal 2015 and 2014, respectively. Sales to foreign customers were 15% and 10% of consolidated net sales in fiscal 2015 and 2014, respectively. The Company had one customer who comprised more than 10% of the Company’s sales in FY 2015, Lockheed Martin (27.2%). The account is in good standing with the Company.

The Company attempts to minimize credit risk by reviewing all customers’ credit history before extending credit, by monitoring customers’ credit exposure on a daily basis and requiring letters of credit for certain sales. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

Note 11. Supplemental Cash Flow Information


	Fiscal Year Ended (in thousands)
	February 28,			February 28,
	2015			2014
Cash paid for:
Interest	$	78		$	814

Income taxes, net of refunds	$	(100	)	$	(227	)

Non-cash activity:
Lexel Imaging Reacquisition -
Accounts receivable	$	473		$	—

Lexel Imaging Reacquisition—
Note receivable	$	900		$	—

Receipt of note receivable in conjunction with the sale of Z-Axis, Inc	$	95		$	1,000

Receipt of note receivable in conjunction with the sale of Lexel Imaging, Inc	$	—		$	1,000

Stock grant related to the acquisition of
StingRay56	$	—		$	166

Note 12. Selected Quarterly Financial Data (unaudited)

The following table sets forth selected quarterly consolidated financial data for the fiscal years ended February 28, 2015 and 2014, respectively. The summation of quarterly net income (loss) per share may not agree with annual net income (loss) per share due to rounding. Excludes discontinued operations:


	2015
	First Quarter		Second Quarter		Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	3,695	$	2,592	$	3,557		$	2,974
Gross profit		977		14		674			(280	)
Net income (loss)		139		149		(2,836	)		(3,445	)
Basic net income (loss) per share	$	0.02	$	0.02	$	(0.45	)	$	(0.54	)
Diluted net income (loss) per share	$	0.02	$	0.02	$	(0.45	)	$	(0.54	)


	2014
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except per share amounts)
Net Sales	$	4,201		$	2,585		$	3,721		$	3,904
Gross profit		178			224			226			(1,706	)
Net income (loss)		(451	)		(804	)		(651	)		(3,554	)
Basic net income (loss) per share	$	(0.06	)	$	(0.11	)	$	(0.09	)	$	(0.47	)
Diluted net income (loss) per share	$	(0.06	)	$	(0.11	)	$	(0.09	)	$	(0.47	)

Note 13. Gain on Sale of Property, Plant and Equipment

On August 28, 2014, the Company sold its property at 8-18 Riverside Drive in White Mills, PA for $500 thousand. The Company received $497 thousand after closing costs and recognized a gain on sale of $364 thousand.

On May 2, 2013, the Company sold its property at 1416 Alpine Boulevard in Bossier City, LA for $532 thousand. The Company received cash of $495 thousand after commissions and closing costs. The Company recognized a gain on sale of $397 thousand.

Note 14. – Discontinued Operations

On January 16, 2014, the Company sold their wholly-owned subsidiary, Z-Axis, Inc. The sale includes Z-Axis as well as its BEAR Power Supplies and Boundless Technologies business units. Z-Axis, Inc. was sold to one of the subsidiary’s original founders for approximately $9 million in cash and a $1 million dollar note, payable in 59 monthly installments of approximately $25,000 beginning January 2016. The Company recognized a gain on the sale of $5.4 million pre-tax during the year ended February 28, 2014. Z-Axis, Inc. had $7.8 million in net sales and pre-tax net profit of $0.6 million for the ten and a half months of fiscal 2014 before the sale.

On March 26, 2014 with an effective date of February 28, 2014, the Company completed the sale of the Company’s wholly-owned subsidiary, Lexel Imaging, Inc. to Citadal Partners, LLC for approximately $3.9 million, consisting of $1.0 million cash payable over 180 days and included in current assets as a note and a guarantee to purchase $2.9 million in inventory over a five year period. The inventory was adjusted to its net realizable value as part of the sale. The Company recognized a loss on the sale of $4.4 million pre-tax during the year ended February 28, 2014. Lexel Imaging, Inc. had net sales of $ 7.6 million and a pre-tax net loss of $0.8 million for the twelve months ending February 28, 2014.

All of these companies’ net sales, expenses and net profits are being shown as discontinued operations per ASC 205-20-45 “Reporting Discontinued Operations”. The assets, liabilities, operating income and cash flows from these businesses are reflected as discontinued operations in the consolidated financial statements for all periods presented. The Company has reclassified results that were previously included in continuing operations as discontinued operations for these businesses.

The summarized financial information for discontinued operations for the year-ended February 28, 2015, and 2014, is as follows:


	Fiscal 2015			Fiscal 2014
Net sales		1,543			23,637
Cost of goods sold		1,388			18,319

Gross profit		155			5,318

Operating expenses
Selling and delivery		—			1,609
General and administrative		163			3,638

Total operating expenses		163			5,247

Operating profit (loss) from discontinued operations		(8	)		71
Other income		75			190
Interest expense		—			(6	)

Other, net		75			184
Gain on sale of assets		—			3,956

		75			4,140

Income from discontinued operations before income taxes		67			4,211
Income tax expense		23			1,432

Income from discontinued operations		44			2,779

Note 15. Subsequent Events

Video Display Corporation was unable to maintain its listing on the NASDAQ National Market due to the total market capitalization of its publicly traded (non-insider) common shares outstanding being less than the $5.0 million required for continued listing. Due to the delisting notification by NASDAQ of Company’s failure to maintain that value level, the Company voluntarily determined not to make the payment of the required NASDAQ $40,000 annual fee for the 2015 calendar year. Trading on the NASDAQ National Market was suspended prior to the opening on April 30, 2015. The Company began trading on the over the counter marketplace on April 30, 2015. Video Display Corporation anticipates that it will continue to remain a publicly traded company and file required reports with the Securities and Exchange Commission.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A (T). Controls and Procedures.

Evaluation of disclosure controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (February 28, 2015). Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as the principal executive and financial officers, respectively, to allow final decisions regarding required disclosures. Based on their evaluation of the Company’s disclosure controls and procedures as of February 28, 2015, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective.

The required certifications of our Chief Executive Officer and our Chief Financial Officer are included as exhibits to this Annual Report on Form 10-K. The disclosures set forth in this Item 9A contain information concerning the evaluation of our disclosure controls and procedures, internal control over financial reporting and changes to internal control referred to in those certifications. Those certifications should be read in conjunction with this Item 9A for a more complete understanding of the matters covered by the certifications.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

Changes in Internal Controls

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

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

All internal controls, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of February 28, 2015. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 Framework) entitled “ Internal Control- Integrated Framework. ” Based on such assessment, our management concluded that as of February 28, 2015 our internal control over financial reporting was effective.

Limitations on the effectiveness of controls.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that internal control over financial reporting and our disclosure controls and procedures will prevent all errors and potential fraud. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within Video Display Corporation have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple errors or mistakes. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information contained in Video Display Corporation’s Proxy Statement to be filed within 120 days of the Company’s 2015 fiscal year end (the “2015 Proxy Statement”), with respect to directors and executive officers of the Company under the headings “Election of Directors” and “Executive Officers”, is incorporated herein by reference in response to this item; provided, however, that the information contained in the 2015 Proxy Statement under the heading “Compensation and Stock Option Committee Report” or under the heading “Performance Graph” shall not be incorporated herein by reference.

Item 11. Executive Compensation.

The information contained in the 2015 Proxy Statement under the heading, “Executive Compensation and Other Benefits”, with respect to executive compensation, is incorporated herein by reference in response to this item.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information contained in the 2015 Proxy Statement under the headings “Common Stock Ownership” and “Executive Compensation and Other Benefits”, is incorporated herein by reference in response to this item.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information contained in the 2015 Proxy Statement under the heading, “Transactions with Affiliates”, is incorporated herein by reference in response to this item.

Item 14. Principal Accounting Fees and Services.

The information contained in the 2015 Proxy Statement under the heading, “Audit Fees and All Other Fees” is incorporated herein by reference in response to this item.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a)	The following documents are filed as part of this Report:

Financial Statements:

The following consolidated financial statements of the Company and its consolidated subsidiaries and the Reports of the Independent Registered Public Accounting Firms are included in Part II, Item 8.

Report of Independent Registered Public Accounting Firm

Condensed Consolidated Balance Sheets as of February 28, 2015 and February 28, 2014.

Condensed Consolidated Statements of Operations—Fiscal Years Ended February 28, 2015 and February 28, 2014.

Condensed Consolidated Statements of Shareholders’ Equity – Fiscal Years Ended February 28, 2015 and February 28, 2014.

Condensed Consolidated Statements of Cash Flows—Fiscal Years Ended February 28, 2015 and February 28, 2014.

Notes to Condensed Consolidated Financial Statements

(b)

Exhibits


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 June 1, 2008 by and between Registrant (Lessee) and Ronald D. Ordway (Lessor) with respect to premises located at 4601 Lewis Road, Stone Mountain, Georgia. (incorporated by reference to Exhibit 10(b) to the Company’s 2009 Annual Report on Form 10-K)

10(c)		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.

10(d)		Purchase Agreement dated August 30, 2013 by and between the Company and Sparton, Inc. with respect to the sale of the Company’s Aydin Displays, Inc. subsidiary. (incorporated by reference to Exhibit 10(d) to the Company’s Current Report on Form 8-K dated September 5, 2013.)

10(e)		Purchase Agreement dated January 16, 2014 by and between the Company and Z-Axis, Inc. with respect to the sale of the Company’s Z-Axis, Inc. subsidiary. (incorporated by reference to Exhibit 10(e) to the Company’s Current Report on Form 8-K dated January 22, 2014.)

10(f)		Purchase Agreement dated March 26, 2014 by and between the Company and Citidal Partners, LLC, with respect to the sale of the Company’s Lexel Imaging, Inc. subsidiary. (incorporated by reference to Exhibit 10(f) to the Company’s Current Report on Form 8-K dated April 1, 2014.)

10(g)		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.

10(j)		Video Display Corporation 2006 Stock Incentive Plan. (incorporated by reference to Appendix A to the Company’s 2006 Proxy Statement on Schedule 14A)

21		Subsidiary Companies

23.1		Consent of Carr, Riggs & Ingram, LLC

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

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


Date: May 29, 2015	VIDEO DISPLAY CORPORATION

	By:	/s/ Ronald D. Ordway
		Ronald D. Ordway
		Chairman of the Board and
		Chief Executive Officer

POWER OF ATTORNEY

Know all men by these presents, that each person whose signature appears below constitutes and appoints Ronald D. Ordway as attorney-in-fact, with power of substitution, for him in any and all capacity, to sign any amendments to this Report on Form 10-K, and to file the same, with exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.


Signature - Name	Capacity	Date

/s/ Ronald D. Ordway	Chief Executive Officer,	May 29, 2015
Ronald D. Ordway	Treasurer and Director
	(Principal Executive Officer)

/s/ Gregory L. Osborn	Chief Financial Officer and Director	May 29, 2015
Gregory L. Osborn	(Principal Financial Officer)

/s/ David S. Cooper	Director	May 29, 2015
David S. Cooper

/s/ Gary Lee	Director	May 29, 2015
Gary Lee

/s/ Roger W. Lusby, III	Director	May 29, 2015
Roger W. Lusby, III

Exhibit 10(c)

VIDEO DISPLAY CORPORATION BUILDING

1868 TUCKER INDUSTRIAL ROAD

TUCKER, GEORGIA 30084

COMMERCIAL LEASE AGREEMENT

between

RONALD D. ORDWAY

(“LANDLORD”)

AND

VIDEO DISPLAY CORPORATION

(“TENANT”)

COMMERCIAL LEASE AGREEMENT

This COMMERCIAL LEASE AGREEMENT (this “ Lease ”) is made and entered into as of March , 2015, by and between Ronald D ORDWAY, an individual (“ Landlord ”), and VIDEO DISPLAY CORPORATION , a Georgia corporation (“ Tenant ”). The following exhibits and attachments are incorporated into and made a part of this Lease: EXHIBIT A (Survey of Premises), EXHIBIT B (Tenant Insurance Requirements), and EXHIBIT C (Building Rules and Regulations).

1. Basic Lease Information .

1.01 “ Building ” shall mean the building located at 1868 Tucker Industrial Road, Tucker, Georgia 30084, and also known as the “Video Display Corporation Building”. “ Rentable Square Footage of the Building ”, without representation, is deemed to be 59,000 rentable square feet.

1.02 “ Premises ” shall mean the area shown on EXHIBIT A to this Lease. The Premises includes the entire Building and the parking spaces appurtenant to the Building. If the Premises include one or more floors in their entirety, all corridors and restroom facilities located on such full floor(s) shall be considered part of the Premises. The “ Rentable Square Footage of the Premises ”, without representation, is deemed to be an aggregate of 59,000 rentable square feet (“ RSF ”). Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Building and the Rentable Square Footage of the Premises are correct.

1.03 “ Base Rent ”: means minimum base rent payable by Tenant to Landlord in the following amounts for the periods indicated:


l Calendar Months of Term	Annual Rate Per RSF		Annual Base Rent		Monthly Base Rent
Months 1 – 42 (4/1/2015 – 9/30/2018)	$	3.292	$	194,220.96	$	16,185.08
Months 43 – 84 (10/1/2018 – 3/31/2022)	$	3.456	$	203,904	$	16,992

“ Additional Rent ” means all sums (exclusive of Base Rent) that Tenant is required to pay to Landlord under this Lease.

1.04 “ Commencement Date ”: shall mean the date of April 1,2015

1.05 “ Security Deposit ”: None

1.06 “ Broker(s) ”: not applicable.

1.07 “ Permitted Use ”: Warehouse and general, executive and administrative offices.

1.08 “ Notice Address(es) ”:

Landlord:

Tenant:

Ronald D Ordway

1868 Tucker Industrial Road

Tucker, Georgia 30084

Attention: Ronald D. Ordway

Video Display Corporation

1868 Tucker Industrial Road

Tucker, Georgia 30084

Attention: Ronald D. Ordway

A copy of any notices to Landlord shall also be sent to any Mortgagee (as hereinafter defined) who may have requested the same.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

1.09 “ Business Day(s) ” are Monday through Friday of each week, exclusive of New Year’s Day, Presidents Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day and any other days observed as holidays by the State of Georgia, the federal government or the labor unions serving the Building (“ Holidays ”). “ Building Service Hours ” are 8 A . M . to 6 P . M . on Business Days.

1.10 “ Property ” means the Building and the parcel(s) of land on which it is located, including the parking areas, Easement Areas and other improvements, if any, serving the Building and the parcel(s) of land on which they are located.

1.11 “ Tenant’s Property ” merchandise, goods, inventory, equipment, furniture, furnishings, decorations and all other personal property owned by Tenant and stored or used at the Premises.

1.12 “ Good Condition ” means the Property shall be clear of trash and debris, broom clean, and (i) the Building shall be structurally sound and free from major defects; (ii) all electrical, heating, air conditioning, plumbing (including septic) and any other mechanical and related equipment and utilities, building systems, appliances and smoke detectors at the Premises shall be in working condition and repair and have an expected useful life of at least 5 years, and (iii) the basement and roof and all other areas and surfaces of the Buildings shall be in good repair and free from leaks and other defects, and the roof shall have a expected useful life of at least 10 years.

2. Lease Grant; Term .

2.01 Base Term . The Premises are hereby leased by Landlord to Tenant, together with the right to use any portions of the Property that are subject to an easement, right of way or other permitted use by the owners, lessees, invitees, licensees and/or guests (the “ Easement Areas ”). The term of this Lease shall commence on the Commencement Date and, unless terminated early or otherwise extended in accordance with this Lease, end on the date that is seven (07) years after the last day of the month in which which date is March 31, 2025 (the “ Expiration Date ”).

3. Commencement Date; Possession .

Tenant shall accept the Premises in its “as is” condition on the Commencement Date. Landlord shall have no obligation to perform any work or make any installations in order to prepare the Premises for Tenant’s occupancy. Tenant represents and warrants to Landlord that the Premises are in Good Condition and satisfactory to Tenant and that Landlord shall have no obligation to perform or complete any work prior to or following the Commencement Date. Landlord shall not be liable for a failure to deliver possession of the Premises or any other space for any reason whatsoever, including, without limitation, due to the holdover or unlawful possession of such space by another party. LANDLORD MAKES NO WARRANTY OR REPRESENTATION REGARDING THE CONDITION OF THE PROPERTY OR THE SUITABILITY OF THE PREMISES FOR THE BUSINESS OF TENANT ANTICIPATED HEREIN.

4. Rent and Additional Rent .

4.01 Base Rent . Tenant shall pay Landlord, without any setoff or deduction, unless expressly set forth in this Lease, all Base Rent and Additional Rent (as hereinafter defined) due for the Term (collectively referred to as “ Rent ”). Base Rent shall commence on the Commencement Date. Base Rent and recurring charges of Additional Rent shall be due and payable in advance on the first (1 ^st ) day of each calendar month without notice or demand, provided that the installment of Base Rent for the first full calendar month of the Term, shall be payable upon the execution of this Lease by Tenant. No termination of this Lease prior to the normal ending hereof, by lapse of time or otherwise, shall affect Landlord’s right to collect rent for the period prior to termination thereof.

4.02 Additional Rent . Tenant shall pay, as Additional Rent, all Taxes and Expenses and all other costs associated with the ownership, operation, maintenance, repair, upkeep, use and occupancy of the Building, the Premises and the Property. Tenant shall also pay and be liable for all rental, sales and use taxes (but excluding income taxes), if any, imposed upon or

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

measured by Rent. Additional Rent shall be due and payable on demand. Unless otherwise specified herein to the contrary, all other items of Rent shall be due and payable by Tenant on or before fifteen (15) days after billing by Landlord. All Additional Rent shall commence on the Commencement Date except as expressly provided otherwise. All Taxes and Expenses shall be paid directly by Tenant to the applicable service provider or other payee. To the extent that any such Taxes or Expenses are billed to and paid by Landlord, Tenant shall reimburse Landlord for such Taxes and Expenses upon demand, as Additional Rent. Tenant shall provide satisfactory proof of payment of all such Taxes and Expenses paid by Tenant upon payment by Tenant and/or upon Landlord’s request.

4.03 Payment of Rent . Rent shall be made payable to the entity, and sent to the address of Landlord set forth herein or such other address Landlord designates, and shall be made by good and sufficient check drawn on a local bank or by other means acceptable to Landlord. Tenant shall pay Landlord an administration fee equal to five percent (5%) of all past due Rent. All bad/returned/dishonored checks written by Tenant to Landlord for any obligations herein will incur a bad check fee of five percent (5%) of the face amount of the check. This charge is in addition to any late fee that may be assessed above. In addition, past due Rent shall accrue interest at eighteen percent (18%) per annum or the maximum rate permitted by law, whichever is less. Landlord’s acceptance of less than the correct amount of Rent shall be considered a payment on account of the earliest Rent due. Rent for any partial month during the Term shall be prorated. No endorsement or statement on a check or letter accompanying payment shall be considered an accord and satisfaction. Tenant’s covenant to pay Rent is independent of every other covenant in this Lease.

(a) “ Taxes ” means (a) all real property taxes and other assessments on the Building and Property, including, but not limited to, gross receipts taxes, assessments for special improvement districts and building improvement districts, governmental charges, fees and assessments for police, fire, traffic mitigation and other governmental services of purported benefit to the Property, taxes and assessments levied in substitution or supplementation in whole or in part of any such taxes and assessments and the Property’s share of any real estate taxes and assessments under any reciprocal easement agreement, common area agreement or similar agreement as to the Property; (b) all personal property taxes for property that is owned by Landlord or Tenant and used in connection with the operation, maintenance and repair of the Property; and (c) all costs and fees incurred in connection with seeking reductions in any tax liabilities described in (a) and (b), including, without limitation, any costs incurred by Landlord for compliance, review and appeal of tax liabilities. Taxes shall not include any income, capital levy, transfer, capital stock, gift, estate or inheritance tax. If a reduction in Taxes is obtained by Landlord or Tenant for any year of the Term, the savings shall be shared equally between Landlord and Tenant for the duration of such savings.

(b) “ Expenses ” means all costs and expenses incurred in each calendar year in connection with operating, maintaining, repairing, replacing, cleaning and managing the Property, including, without limitation, the Building. Expenses include, without limitation: (i) all labor and labor related costs, landscaping, cleaning, janitorial, replacement of damaged or obsolete fixtures and parts, snow and ice removal, and routine maintenance and inspections of the Building and Property, which shall be paid directly by Tenant; (ii) the cost of repairs, maintenance and services to the Building and the Property; (v) rental and purchase cost of parts, supplies, tools and equipment; (vi) insurance premiums and deductibles; (iii) electricity, gas, oil, steam, water, sewer and other utility costs serving the Property; (iv) fines, interest and penalties incurred due to the late payment of Taxes or Expenses; (v) the cost of compliance with all applicable Laws, including any Hazardous Materials Laws, and all governmental filings, actions and proceedings; (vi) any costs and expenses relating to the operation, use and maintenance of any access easements or other rights of way that benefit or burden the Property, including any legal fees associated with the documentation thereof or disputes or legal proceedings involving any adjoining property owner or other person regarding the use, ownership, maintenance and operation thereof; and (vii) the cost of all capital improvements to the Property (including without limitation those which are performed primarily to reduce current or future operating expense costs, upgrade Building security or otherwise improve the operating efficiency of the Property; required to comply with any Laws that are enacted, or first interpreted to apply to the Property, after the date of

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

the Lease; performed in lieu of a repair; or required to be made by Tenant in accordance with this Lease or required in order to ensure surrender of the Premises to Landlord in the condition required by this Lease. Expenses shall not include: (i) depreciation of the Building, (ii) principal payments of mortgage and other non-operating debts of Landlord, (iii) the cost of repairs or other work to the extent Landlord is reimbursed by insurance or condemnation proceeds, (iv) costs of Landlord incurred in connection with re-letting the space in the Building after the Expiration Date, including brokerage commissions, lease concessions, rental abatements and construction allowances granted to other tenants of the Property, (v) costs incurred in connection with the sale, financing or refinancing of the Building, and (vi) organizational expenses associated with the creation and operation of the entity which constitutes Landlord.

4.04 Absolute Net Lease . Tenant agrees and acknowledges that this Lease is intended to be and shall be an “absolute net” lease whereby all of the costs and expenses associated with the ownership, operation, maintenance, repair, upkeep, use and occupancy of the Building, the Premises (including the Easement Areas) and the Property during the Term shall be paid for by Tenant (directly or by reimbursement of Landlord to the extent paid by Landlord), and all duties and responsibilities associated with the operation, maintenance, repair, upkeep, use and occupancy of the Building, the Premises (including the Easement Areas) and the Property, shall be performed by and the sole responsibility of Tenant during the Term. Landlord shall have no obligation to pay for or perform any repairs, maintenance or other duties with respect to the operation, maintenance, repair, upkeep, use and occupancy, except for items that are not Expenses associated with the Property and expressly the sole responsibility of Landlord under this Lease (i.e., Landlord’s mortgage payments, broker’s fees for re-letting the space after the Expiration Date, Landlord’s income taxes, Landlord’s entity formation and limited liability company filings).

5. Compliance with Laws; Use; Hazardous Materials .

5.01 Compliance with Laws . The Premises shall be used for the Permitted Use and for no other use whatsoever. Tenant shall comply with all laws, statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity whether in effect now or later (“ Law(s) ”), including, without limitation, the Americans with Disabilities Act (the “ ADA ”), regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises. In addition, Tenant shall, at its sole cost and expense, promptly comply with any Laws that relate to the Building, but only to the extent such obligations are triggered by Tenant’s use of the Premises, other than for the Permitted Use, or Alterations or improvements in the Premises performed or requested by Tenant. Tenant shall promptly provide Landlord with copies of any notices it receives regarding an alleged violation of Law. Tenant shall comply with the rules and regulations of the Building attached hereto as EXHIBIT C and such other reasonable rules and regulations adopted by Landlord from time to time, including rules and regulations for the performance of Alterations (defined below).

5.02 Hazardous Materials . Tenant covenants and agrees that Tenant shall, at Tenant’s sole cost and expense, comply at all times with all Laws governing the use, generation, storage, treatment and/or disposal of any Hazardous Materials (as defined below), the presence of which results from or in connection with the act or omission of Tenant or Tenant Related Parties or the breach of this Lease by Tenant or Tenant Related Parties. The term “ Hazardous Materials ” shall mean any biologically or chemically active or other toxic or hazardous wastes, pollutants or substances, including, without limitation, asbestos, PCBs, petroleum products and by-products, substances defined or listed as “hazardous substances” or “toxic substances” or similarly identified in or pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., and as hazardous wastes under the Resource Conservation and Recovery Act, 42 U.S.C. § 6010, et seq., any chemical substance or mixture regulated under the Toxic Substance Control Act of 1976, as amended, 15 U.S.C. § 2601, et seq., any “toxic pollutant” under the Clean Water Act, 33 U.S.C. § 466 et seq., as amended, any hazardous air pollutant under the Clean Air Act, 42 U.S.C. § 7401 et seq., hazardous materials identified in or pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 1802, et seq., and any hazardous or toxic substances or pollutant regulated under any other Laws. Tenant shall agree to execute, from time to time, at Landlord’s request, affidavits, representations and the like concerning Tenant’s best knowledge and belief regarding the presence of Hazardous

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

Materials in, on, under or about the Premises or the Property. Tenant shall cooperate with Landlord in satisfying any Laws imposed upon Landlord relating to Tenant’s operations, and shall, upon request, furnish complete information to Landlord concerning the use or existence of any Hazardous Materials, contamination or pollution at the Building. Tenant shall indemnify and hold harmless all Landlord Related Parties from and against any loss, cost, damage, liability or expense (including attorneys’ fees and disbursements) arising by reason of any required filings, compliance, clean up, removal, remediation, detoxification action or any other activity required or recommended of any Landlord Related Parties (as defined below) by any governmental authority by reason of the presence in or about the Premises or the Property of any Hazardous Materials, as a result of or in connection with the act or omission of Tenant, Tenant Related Parties (as defined below) or any other person, or the breach of this Lease by Tenant or Tenant Related Parties. The foregoing covenants and indemnity shall survive the expiration or any termination of this Lease.

5.03 ADA Provisions . Tenant shall be liable for any cost, claim or alteration required by or otherwise arising from the ADA which is: (i) related to the existing condition and structure of the Premises, including, but not limited to, all doors (both interior and exterior), door hardware, electrical, plumbing, and floor covering; (ii) resulting from any improvement or alteration of the Premises made by Tenant; or (iii) resulting from Tenant’s use of the Premises

5.04 Abandonment . Tenant agrees not to abandon or vacate the Premises during the period of this lease and agrees to use and maintain the Premises for the purpose herein leased until the expiration hereof.

6. Building Services; Limitation of Liability of Landlord .

6.01 No Services Provided by Landlord . Landlord shall not be required to furnish any services to Tenant, including without limitation, security, cleaning, repairs, janitorial, landscaping, water, sewer, trash removal, electricity, air-conditioning, ventilation, heat, elevator, plumbing, or other services to the Premises and Landlord shall have no responsibility or liability for failure to supply any such services. All electricity consumed by Tenant in the Premises shall be paid for by Tenant. Tenant shall procure and pay for all required services and furnish, install and maintain, at Tenant’s sole cost and expense, all plumbing, electric and mechanical systems and components (including heating, air conditioning and ventilation), all fixtures (including sinks, toilets and other bathroom fixtures, lighting fixtures and lighting tubes, lamps, bulbs, and ballasts and other components), all communication systems, and all other personal property required for the use of the Premises.

6.02 Emergency Interruption . Landlord reserves the right to stop or interrupt water, electricity and other Building services when necessary, by reason of accident, or emergency, or for alterations in the judgment of Landlord desirable or necessary to be made, until such accident or emergency shall have ceased or said alterations shall have been completed. Landlord shall have no responsibility or liability for such interruption, curtailment or suspension of services, and no diminution or abatement of rent or other compensation shall or will be claimed by Tenant as a result therefrom, nor shall this Lease or any of the obligations of Tenant be affected or reduced by reason of such interruption, curtailment or suspension, nor shall the same constitute an actual or constructive eviction.

6.03 No Liability of Landlord . Landlord shall not be liable to Tenant for the condition of the Property, weather conditions, or any damage or destruction to the Property, for any reason whatsoever, including without limitation, any of the following:

(a) Lack of access to the Property, Building or the Premises (which shall include, but not be limited to, the lack of access to the Building or the Premises when it or they are structurally sound but inaccessible due to evacuation of the surrounding area or damage to nearby structures or public areas);

(b) Poor air quality or contaminants within the Building that could adversely affect the Building or its occupants (including, but not limited to, the presence of biological or other airborne agents within the Building or the Premises);

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

(c) Disruption or lack of adequate water/sewer, trash removal, utilities, telephone and telecommunications services, mail and deliveries to the Building or the Premises, now existing or resulting from a casualty or any other event; and

(d) Blockages of any windows, doors, or walkways to the Building or the Premises.

7. Leasehold Improvements .

7.01 Improvements and Alterations . All improvements in and to the Premises, including any Alterations (defined in Section 9.03 ) (collectively, “ Leasehold Improvements ”) shall remain upon the Premises at the end of the Term without compensation to Tenant, provided that Tenant, at its expense, removes any Required Removables (as hereinafter defined), in compliance with the National Electric Code or other applicable Law. Landlord, by written notice to Tenant at least thirty (30) days prior to the Expiration Date, may require Tenant, at its expense, to remove any Alterations that, in Landlord’s reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements (such items collectively are referred to as “ Required Removables ”). Required Removables shall include, without limitation, Tenant’s personal property and merchandise, interior and exterior signage, internal stairways, raised floors, personal baths and showers, vaults, rolling file systems and structural alterations and modifications and, notwithstanding anything to the contrary in this Lease, Tenant shall have an obligation to remove the Required Removables specifically enumerated in this sentence upon the expiration or earlier termination of this Lease whether or not Landlord delivers notice to Tenant requiring removal of the same as contemplated by the immediately preceding sentence. The Required Removables shall be removed by Tenant before the Expiration Date or earlier termination of this Lease. Tenant shall repair damage caused by the installation or removal of Required Removables. If Tenant fails to perform its obligations in a timely manner, Landlord may perform such work at Tenant’s expense. Tenant, at the time it requests approval for a proposed Alteration, may request in writing that Landlord advise Tenant whether the Alteration is a Required Removable. Within ten (10) days after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to which portions of the Alteration are Required Removables. If a Default has occurred and remains uncured at the Expiration Date, Tenant shall not be entitled to remove any of its personal property or merchandise, without the express written approval of Landlord, and Landlord shall have all rights therein as are then available to Landlord by law.

7.02 Signage . Tenant shall place no signs upon the outside walls or roof of Premises except with the written consent of Landlord. Landlord approves the signs installed at the Premises as of the date of this Lease. Any and all signs placed on the within Leased Premises by Tenant shall be maintained in compliance with all governmental ordinances, rules and regulations governing such signs, and Tenant shall be responsible to Landlord for any damage caused by installation, use or maintenance of said signs or violation of ordinance, rule or regulation with regard thereto. Upon any removal of said signs Tenant shall simultaneously repair all damage incidental to such removal.

8. Inspections, Repairs and Alterations .

8.01 Inspections . Tenant shall periodically inspect the Premises to identify any conditions that are dangerous, deteriorating or in need of maintenance or repair. Tenant shall promptly provide Landlord with notice of any such conditions. Tenant shall, at its sole cost and expense, perform all capital improvements, maintenance and repairs to the Premises and keep the Premises in good condition and repair and in good working order, reasonable wear and tear excepted. Tenant shall be responsible for all maintenance and repairs to the Premises, whether caused by negligence, casualty, wear and tear, or otherwise, and whether or not such repairs are covered by insurance. Tenant shall promptly make repairs and perform maintenance for which Tenant is responsible.

8.02 Repairs and Maintenance . Tenant’s repair and maintenance obligations include, without limitation, repairs to and maintenance of (a) the roof, foundation and structural elements of the Building; (b) mechanical (including HVAC), electrical, plumbing and fire/life safety systems serving the Building and Premises in general; (c) the lawn, walkways and parking areas

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

of the Premises; (d) the Easement Areas; (e) interior and exterior walls and doors of the Building; (f) interior and exterior windows; (g) any elevators serving the Building; (h) floor covering, interior partitions, kitchens, bathrooms and restrooms (including, without limitation, hot water heaters and similar facilities, systems and/or equipment); (i) electronic, fiber, phone and data cabling, wiring and related equipment (collectively, “ Cable ”); (j) supplemental air conditioning units; and (k) Alterations, including, without limitation, any Initial Alterations.

If Tenant fails to make any repairs to the Premises for more than fifteen (15) days after notice from Landlord (although notice shall not be required in an emergency), Landlord may make the repairs, and Tenant shall pay the reasonable cost of the repairs, together with an administrative charge in an amount equal to fifteen percent (15%) of the cost of the repairs. To the extent Landlord is not reimbursed by insurance proceeds, Tenant shall reimburse Landlord for the cost of repairing damage to the Building caused by Tenant’s failure to maintain the insurance coverage required by this Lease and/or caused the acts of Tenant, Tenant Related Parties (as hereinafter defined) and their respective contractors and vendors, together with an administrative charge in an amount equal to fifteen percent (15%) of the cost of the repairs.

8.03 Alterations . Tenant shall not make alterations, repairs, additions or improvements or install any Cable in or to the Premises (collectively referred to as “ Alterations ”) without first obtaining the written consent of Landlord in each instance, which consent shall not be unreasonably withheld or delayed, provided that (1) the outside appearance or the strength of the Building shall not be affected; and (2) the structural parts of the Building and the proper functioning of the Building shall not be adversely affected. However, Landlord’s consent shall not be required for any Alteration that satisfies all of the following criteria (a “ Cosmetic Alteration ”): (a) is of a cosmetic nature such as painting, wallpapering, hanging pictures and installing carpeting; (b) is not visible from the exterior of the Premises or Building; (c) will not affect the structure of the Building or require a building permit; and (d) the cost of such Alterations (or a related series of Alterations) does not exceed $25,000.00. Cosmetic Alterations shall be subject to all the other provisions of this Section 9.03 . All non-Cosmetic Alterations, including, without limitation, the Initial Alterations, shall be performed by a licensed General Contractor approved by Landlord in its sole discretion, each charging commercially competitive rates, provided, however , Landlord may designate specific contractors with respect to specific structural items. Prior to starting any non-Cosmetic Alterations, including, without limitation, the Initial Alterations, Tenant shall furnish Landlord, for its approval, the proposed plans and specifications; names of proposed contractors and sub-contractors; required permits and approvals; evidence of contractor’s and subcontractor’s insurance (including workers’ compensation insurance) in amounts reasonably required by Landlord and naming Landlord as an additional insured; and any security for performance in amounts reasonably required by Landlord. Changes to the plans and specifications must also be submitted to Landlord for its approval. Alterations shall be constructed in a good and workmanlike manner, in accordance with all applicable Laws and using new materials of a quality reasonably approved by Landlord. Tenant shall reimburse Landlord for any sums paid by Landlord for third party examination of Tenant’s plans for Alterations. In addition, Tenant shall pay Landlord a fee for Landlord’s oversight and coordination of any non-Cosmetic Alterations equal to 10% of the cost of the non-Cosmetic Alterations.

8.04 Immediate Repairs . The Tenant agrees to perform the following immediate repairs to the Property as soon as practicable following the Commencement Date: (i) Tenant shall recoat the existing roof as a matter of maintenance to keep it in good condition,

9. Entry by Landlord .

Landlord may enter the Premises to inspect the Premises, show the Premises to any prospective purchaser, lender, investor or tenant, or to perform or facilitate the performance of repairs, alterations or additions to the Premises or any portion of the Building. Landlord shall have the right to enter premises at reasonable hours to exhibit same of prospective purchasers or tenants. Except in the case of an emergency, Landlord shall provide Tenant with reasonable prior oral or written notice of entry and shall use reasonable efforts to minimize any interference with Tenant’s use of the Premises. During the final Lease Year, Landlord may install signs on the Premises indicating that the Property is “For Rent” or “For Sale”. If reasonably necessary, Landlord may temporarily close all or a portion of the Premises, the Building and/or the Property to perform repairs, alterations and additions. However, except in emergencies, Landlord will not close the Premises if the work can reasonably be completed on weekends and after Building Service Hours. Entry by Landlord shall not constitute a constructive eviction or entitle Tenant to an abatement or reduction of Rent.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

10. Liens .

Tenant shall not permit mechanics’ or other liens to be placed upon the Property, Premises or Tenant’s leasehold interest in connection with any work or service done or purportedly done by or for the benefit of Tenant or its transferees. Tenant shall give Landlord notice at least fifteen (15) days prior to the commencement of any work in the Premises to afford Landlord the opportunity, where applicable, to post and record notices of non-responsibility. Tenant, within thirty (30) days of notice from Landlord, shall fully discharge any lien by settlement, by bonding or by insuring over the lien in the manner prescribed by the applicable lien Law and, if Tenant fails to do so, Tenant shall be deemed in Default under this Lease and, in addition to any other remedies available to Landlord as a result of such Default by Tenant, Landlord, at its option, may bond, insure over or otherwise discharge the lien. Tenant shall reimburse Landlord for any amount paid by Landlord, including, without limitation, reasonable attorneys’ fees.

11. Indemnity and Waiver of Claims .

Except to the extent caused by the sole negligence or willful misconduct of Landlord or any Landlord Related Parties (defined below), Tenant shall indemnify, defend and hold Landlord and the Landlord Related Parties harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees and other professional fees (if and to the extent permitted by Law) (collectively referred to as “ Losses ”), which may be imposed upon, incurred by or asserted against Landlord and/or any of the Landlord Related Parties and arising out of or in connection with: (a) Tenant’s use or occupancy of the Property or Landlord’s ownership of the Property, (b) injury or death, bodily or personal injury, damage to or destruction of property occurring on or about the Premises, and/or (c) any acts or omissions (including violations of Law) of Tenant, the Tenant Related Parties (defined below) and/or any of Tenant’s transferees, contractors or licensees.

Tenant hereby waives all claims, causes of action and rights of recovery against and releases Landlord, Landlord’s agents and its trustees, members, principals, beneficiaries, partners, shareholders, officers, directors, employees, Mortgagees (defined in Section 22 ) and agents (the “ Landlord Related Parties ”) from all claims for any injury or death, bodily or personal injury, damage to or destruction of property (including but not limited to Tenant’s Property) or business loss which shall occur on or about the Premises, regardless of cause, including the negligent wrongdoing of Landlord or Landlord Related Parties, and/or in any manner related to (a) Force Majeure, (b) acts of third parties, (c) the bursting or leaking of any tank, water closet, drain or other pipe, or (d) the inadequacy or failure of any security or protective services, personnel or equipment.

12.	Insurance .

Tenant, at its sole cost and expense, shall procure and continue in full force during the Term of this Lease (as the same may be extended) (including any period prior to the Commencement Date of the Term of this Lease during which Tenant is engaged in any alterations or repairs to the Premises or has otherwise entered upon the Premises to install fixtures or furnishings or for any purpose) such insurances as will protect Tenant, Landlord, Landlord’s managing agent, and their respective officers, directors, shareholders, affiliates, partners, agents and employees from claims under workers’ compensation acts and other employee benefits acts, from claims for injury to persons or damage to property, which may arise out of or result from operations under this Lease, whether by Tenant or anyone directly or indirectly employed by it, or anyone for whose acts it may be liable, for not less than the limits of liability prescribed in EXHIBIT B , or as required by law, whichever is greater, and in accordance with the other requirements set forth in EXHIBIT B .

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

13. Waiver of Claims and Subrogation .

Tenant hereby waives any and all rights of recovery, claims, actions and causes of action against Landlord for any loss or damage with respect to Tenant’s Property, the Leasehold Improvements, Alterations, the Building, the Premises, or any contents thereof, including rights, claims, actions and causes of action based on negligence, whether or not loss or damage is covered by insurance. For the purposes of this waiver, any deductible with respect to a party’s insurance shall be deemed covered by and recoverable by such party under valid and collectable policies of insurance. Tenant shall procure an appropriate clause in, or endorsement on, any fire or extended coverage insurance covering the Tenant’s Property, Leasehold Improvements, Alterations, the Building, the Premises, or any contents thereof, pursuant to which the insurer waives subrogation, or consents to a waiver of right of recovery.

14. Casualty Damage .

14.01 If all or any portion of the Premises becomes untenantable by fire or other casualty to the Premises (collectively a “ Casualty ”), Landlord, with reasonable promptness, shall cause a general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of the amount of time required using standard working methods to Substantially Complete the repair and restoration of the Premises and any Easement Areas necessary to provide access to the Premises (“ Completion Estimate ”). If the Completion Estimate indicates that the Premises or any Easement Areas necessary to provide access to the Premises cannot be made tenantable within one year from the date the repair is started, then Landlord shall have the right to terminate this Lease upon written notice to the other within 10 days after receipt of the Completion Estimate. Tenant, however, shall not have the right to terminate this Lease if the Casualty was caused by the acts or omissions of Tenant or any Tenant Related Parties. In addition, Landlord, by notice to Tenant within 90 days after the date of the Casualty, shall have the right to terminate this Lease if: (1) the Premises have been materially damaged and there is less than two (2) years of the Term remaining on the date of the Casualty; (2) any Mortgagee requires that the insurance proceeds be applied to the payment of the mortgage debt; (3) a material uninsured loss to the Building or Premises occurs or (4) such portion of the Building has been so damaged so that substantial alteration or reconstruction of the Building shall, in Landlord’s opinion, be required.

14.02 If this Lease is not terminated, Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord’s reasonable control and to the extent of insurance proceeds received by Landlord, restore the Premises and Easement Areas. Such restoration shall be to substantially the same condition that existed prior to the Casualty, except for modifications required by Law or any other modifications to the Easement Areas deemed desirable by Landlord, and Landlord shall have no obligation to restore Tenant’s Property or any Alterations or any other improvements that Tenant is required to insure hereunder. Within fifteen (15) days of demand, Tenant shall also pay Landlord for any additional excess costs that are determined during the performance of the repairs. In no event shall Landlord be required to spend more for the restoration than the proceeds received by Landlord, whether insurance proceeds or proceeds from Tenant. Landlord shall not be liable for any inconvenience to Tenant, or injury to Tenant’s business resulting in any way from the Casualty or the repair thereof. Provided that Tenant is not in Default, during any period of time that all or a material portion of the Premises is rendered untenantable as a result of a Casualty, Tenant shall be responsible for the payment of all Rent during such period to the extent that the proceeds of rental loss insurance are insufficient to pay the amount of Rent due to Landlord.

15. Condemnation .

Either party may terminate this Lease if any material part of the Premises is taken or condemned for any public or quasi-public use under Law, by eminent domain or private purchase in lieu thereof (a “ Taking ”). The term “material part of the Premises” means more than 75% of the rentable square footage of the Building or any taking which renders the remaining portion of the Premises unusable by Tenant. The terminating party shall provide written notice of termination to the other party within forty-five (45) days after it first receives notice of the Taking. The termination shall be effective as of the effective date of any order granting possession to, or vesting legal title in, the condemning authority. If this Lease is not terminated,

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

Base Rent and Taxes and Expenses shall be appropriately adjusted to account for any reduction in the square footage of the Building or Premises. All compensation awarded for a Taking shall be the property of Landlord. The right to receive compensation or proceeds are expressly waived by Tenant, however, Tenant may file a separate claim for Tenant’s personal property and Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the amount of Landlord’s award. If only a part of the Premises is subject to a Taking and this Lease is not terminated, Landlord shall have no obligation to and Landlord shall have no obligation to restore Tenant’s Property or any Alterations or any other improvements that Tenant is required to insure hereunder; provided, however, that if Landlord elects to restore the remaining portion of the Premises to substantially the same condition immediately prior to the Taking and does so restore the Premises, there shall be no reduction in the Base Rent and Taxes and Expenses upon restoration.

16. Events of Default . In addition to any other default specifically described in this Lease, each of the following occurrences shall be a “ Default ”:

(a) Tenant’s failure to pay any portion of Rent when due, if the failure continues for three (3) days after written notice to Tenant (“ Monetary Default ”);

(b) Tenant’s failure (other than a Monetary Default) to comply with any term, provision, condition or covenant of this Lease, if the failure is not cured within ten (10) days after written notice to Tenant, provided , however , if Tenant’s failure to comply cannot reasonably be cured within 10 days, Tenant shall be allowed additional time (not to exceed thirty (30) days) as is reasonably necessary to cure the failure so long as Tenant begins the cure within ten (10) days and diligently pursues the cure to completion;

(c) Tenant permits an assignment, sublet or other transfer of this Lease without Landlord’s required approval or otherwise in violation of Article 11 of this Lease;

(d) the leasehold estate is taken by process or operation of Law;

(e) Tenant does not take possession of or abandons or vacates a material portion of the Premises;

(f) Tenant or any Guarantor becomes insolvent, makes a transfer in fraud of creditors, makes an assignment for the benefit of creditors, admits in writing its inability to pay its debts when due or forfeits or loses its right to conduct business, or any Guarantor dies or becomes disabled and such Guarantor is unable to continue to manage the day to day operations of Tenant; or

(g) if any case, proceeding or other action is commenced or instituted against Tenant or any Guarantor (i) seeking to have an order for relief entered against it as debtor or to adjudicate it bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution or other relief with respect to it or its debts under any existing or future law of any jurisdiction domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors; or (ii) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property.

If Landlord provides Tenant with notice of Tenant’s failure to comply with any specific provision of this Lease on three (3) separate occasions during any twelve (12) month period, Tenant’s subsequent violation of such provision shall, at Landlord’s option, be an incurable Default by Tenant. All notices sent under this Section shall be in satisfaction of, and not in addition to, notice required by Law.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

17. Remedies .

17.01 Upon Default, Landlord shall have the right to pursue any one or more of the following remedies:

(a) Perform, on behalf and at the expense of Tenant, any obligation of Tenant under this Lease which Tenant has failed to perform and of which Landlord shall have given Tenant notice, the cost of which performance by Landlord, together with interest thereon at the highest interest rate allowed by law from the date of such expenditure, shall be deemed Additional Rent and shall be payable by Tenant to Landlord upon demand. Notwithstanding the provisions of this clause (b) and regardless of whether an Event of Default shall have occurred, Landlord may exercise the remedy described in this clause (b) without any notice to Tenant if Landlord, in its good faith judgment, believes it would be materially injured by failure to take rapid action or if the unperformed obligation of Tenant constitutes an emergency;

(b) Elect to terminate this Lease and the tenancy created hereby by giving notice of such election to Tenant, and reenter the Premises, without the necessity of legal proceedings, and may remove Tenant and all other persons and property from the Premises, and may store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant without resort to legal process and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby;

(c) With or without terminating this Lease, enter upon the Premises by summary proceedings or otherwise, and in any event may dispossess the Tenant and any other persons occupying the Premises, remove and store at Tenant’s expense in a public warehouse or elsewhere all of Tenant’s Property and other property left on the Premises, all without service of notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which may be occasioned thereby;

(d) With or without terminating this Lease, declare immediately due and payable all rental and other amounts due and coming due under this Lease for the entire remaining term hereof, and in such event Tenant agrees to pay such amount, provided, however, that such payment shall not be deemed a penalty or liquidated damages but shall merely constitute payment in advance of rent for the remainder of said term;

(e) Remove Tenant and any other parties occupying the Premises and, at Landlord’s election, relet all or any part of the Premises, without notice to Tenant, for such period of time and on such terms and conditions (which may include concessions, free rent and work allowances) as Landlord in its absolute discretion shall determine. Landlord may collect and receive all rents and other income from the reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of Reletting and any deficiency arising from the reletting or failure to relet the Premises. The re-entry or taking of possession of the Premises shall not be construed as an election by Landlord to terminate this Lease. Upon a Default by Tenant, Landlord shall not be required to relet the Premises except to the extent required by applicable Laws; and/or

(f) Exercise any other legal or equitable right or remedy which it may have under Georgia law.

17.02 In the event it should become necessary for Landlord to retain an attorney at law to collect or obtain performance of any obligation to which Landlord is entitled hereunder, Landlord shall be entitled to reasonable attorney’s fees thereof. Any costs and expenses incurred by Landlord (including, without limitation, reasonable attorneys’ fees and Costs of Reletting) as a result of any Default by Tenant and/or in enforcing any of its rights or remedies under this Lease shall be deemed to be Additional Rent and shall be repaid to Landlord by Tenant upon demand.

17.03 Tenant waives all defenses afforded by the Official Code of Georgia Annotated, Sections 44-7-52 and 44-7-73, to any action filed by Landlord as a result of any Default hereunder by Tenant and Tenant hereby expressly agrees that Landlord shall have no obligation to accept a tender of rent by Tenant after a default or defaults by Tenant, notwithstanding said provisions of the Official Code of Georgia Annotated.

17.04 In lieu of calculating damages under Section 19.01 , Landlord may elect to receive as damages the sum of (a) all Rent accrued through the date of termination of this Lease or Tenant’s right to possession, and (b) an amount equal to the total Rent that Tenant would have

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

been required to pay for the remainder of the Term discounted to present value at the Prime Rate (defined below) then in effect, minus the then present fair rental value of the Premises for the remainder of the Term, similarly discounted, after deducting all anticipated Costs of Reletting. “ Prime Rate ” shall be the per annum interest rate publicly announced as its prime or base rate by a federally insured bank selected by Landlord in the state in which the Building is located.

17.05 If Tenant is in Default of any of its non-monetary obligations under the Lease, Landlord shall have the right to perform such obligations. Tenant shall reimburse Landlord for the cost of such performance upon demand together with an administrative charge equal to ten (10%) of the cost of the work performed by Landlord. The repossession or re-entering of all or any part of the Premises shall not relieve Tenant of its liabilities and obligations under this Lease. No right or remedy of Landlord shall be exclusive of any other right or remedy. Each right and remedy shall be cumulative and in addition to any other right and remedy now or subsequently available to Landlord at Law or in equity.

18. Limitation of Liability .

NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS LEASE, THE LIABILITY OF LANDLORD (AND OF ANY SUCCESSOR LANDLORD) SHALL BE LIMITED TO THE INTEREST OF LANDLORD IN THE PROPERTY. TENANT SHALL LOOK SOLELY TO LANDLORD’S INTEREST IN THE PROPERTY FOR THE RECOVERY OF ANY JUDGMENT OR AWARD AGAINST LANDLORD OR ANY LANDLORD RELATED PARTY. NEITHER LANDLORD NOR ANY LANDLORD RELATED PARTY SHALL BE PERSONALLY LIABLE FOR ANY JUDGMENT OR DEFICIENCY, AND IN NO EVENT SHALL LANDLORD OR ANY LANDLORD RELATED PARTY BE LIABLE TO TENANT FOR ANY LOST PROFIT, DAMAGE TO OR LOSS OF BUSINESS OR ANY FORM OF SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGE. BEFORE FILING SUIT FOR AN ALLEGED DEFAULT BY LANDLORD, TENANT SHALL GIVE LANDLORD AND THE MORTGAGEE(S) WHOM TENANT HAS BEEN NOTIFIED HOLD MORTGAGES (DEFINED IN SECTION 22 BELOW), NOTICE AND REASONABLE TIME TO CURE THE ALLEGED DEFAULT.

19. Subordination to Mortgages; Estoppel Certificate; Notice to Mortgagees .

19.01 Subordination . Tenant accepts this Lease subject and subordinate to any mortgage(s), deed(s) of trust, deed(s) to secure debt, ground lease(s), easement agreement(s), or other lien(s) now or subsequently arising upon the Premises, the Building or the Property, and to renewals, modifications, consolidations, refinancings and extensions thereof (collectively referred to as a “ Mortgage ”); provided, however , that this Lease shall not be subordinate to any Mortgage other than a first priority Mortgage without the written consent of the holder of such first priority Mortgage. The party having the benefit of a Mortgage shall be referred to as a “ Mortgagee ”. This clause shall be self-operative and such automatic subordination shall not require the execution of any document or subordination agreement by Tenant but shall become effective upon the recording of any Deed to Secure Debt or Mortgage, provided, however , that upon request from a Mortgagee, Tenant shall execute a subordination agreement in favor of the Mortgagee within ten (10) days after Mortgagee’s written request therefor. As an alternative, a Mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. Upon request, Tenant, without charge, shall attorn to any successor to Landlord’s interest in this Lease. Any such attornment shall be made upon the condition that no such Mortgagee shall be (a) liable for any act or omission of any prior landlord (including, without limitation, the then defaulting landlord); or (b) subject to any defense or offsets (except as expressly set forth in this Lease) which Tenant may have against any prior landlord (including, without limitation, the then defaulting landlord); or (c) bound by any payment of Rent which Tenant might have paid for more than the current month to any prior landlord (including, without limitation, the then defaulting landlord); or (d) bound by any obligation to make any payment to Tenant which was required to be made by Landlord hereunder; or (e) bound by any obligation to perform any work or to make improvements to the Premises except for (i) repairs and maintenance pursuant to the provisions of Article 9 , and (ii) repairs to the Premises or any part thereof as a result of damage by fire or other casualty pursuant to Article 16 , but only to the extent that such repairs can be reasonably made from the net proceeds of any insurance actually made available to such Mortgagee.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

19.02 Estoppel Certificates . Tenant shall at any time upon not less than ten (10) days prior written notice from Landlord execute, acknowledge and deliver to Landlord or to any Mortgagee of Landlord a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease as so modified, is in full force and effect) and the date to which rent and other charges are paid in advance, if any, (ii) acknowledging that there are no uncured defaults on the part of Landlord hereunder or specifying such defaults if any are claimed, and no Defaults by Tenant hereunder or specifying such Defaults, (iii) certifying the amount of Base Rent due and payable under this Lease, (iv) certifying that all Landlord obligations for construction work or other work, if any, has been completed, (v) certifying Tenant has not assigned or sublet this Lease or any interest therein, (vi) certifying that the Premises are in good condition and repair and Tenant has no knowledge of any defect in the Premises, (vii) certifying Tenant has complied fully and strictly with the provisions of this Lease, (viii) acknowledging that lenders, title insurance companies and prospective purchasers are entitled to rely on such statement, and (ix) such other matters as reasonably requested by Landlord. Such statement shall be in a written form as Landlord, any proposed purchaser of the property or any Mortgagee shall designate. Any such statement may be conclusively relied upon by any prospective purchaser or Mortgagee of the Premises.

Tenant’s failure to deliver any such subordination agreements, attornment agreements and/or estoppel certificates within ten (10) days after Landlord’s request therefor (or Mortgagee’s request for a subordination agreement as provided in Section 22.01 of this Lease) shall be a material default under this Lease. At Landlord’s option, Tenant’s failure to furnish an estoppel certificate shall be conclusive upon Tenant: (i) that this Lease is in full force and effect without modification except as may be represented by Landlord; (ii) that there are no uncured defaults in Landlord’s or Tenant’s performance; (iii) that no more than one (1) month’s rent has been paid in advance and (iv) as otherwise represented by Landlord as to the truth of items (iv)-(ix) above. If Tenant shall fail for any reason to execute any subordination agreement, attornment agreement or estoppel certificate within ten (10) days after Landlord’s request therefor, Landlord shall have the right to execute the same as attorney-in-fact for Tenant. Tenant hereby appoints Landlord as its attorney-in-fact for the limited purposes described in this Section.

Tenant agrees to give to both Landlord and any Mortgagee written notice of any default by Landlord hereunder and a reasonable period (but in any event not less than thirty (30) days) in which to cure such default. Tenant agrees that no amendment or cancellation of this Lease shall be binding upon any such Mortgagee without the written approval of such Mortgagee. Tenant agrees that no such Mortgagee shall be responsible for any liability of Landlord to Tenant for any actions arising prior to such Mortgagee’s acquisition of title to the Premises.

20. Notices .

All demands, approvals, consents and notices (collectively referred to as a “ notice ”) shall be in writing and delivered by hand or sent by registered or certified mail with return receipt requested or sent by nationally-recognized overnight courier service at the party’s respective Notice Address(es) set forth in Article 1 . Each notice shall be deemed to have been received on the earlier to occur of actual delivery or the date on which delivery is refused, or, if Tenant has vacated the Premises or any other Notice Address of Tenant without providing a new Notice Address, three (3) days after notice is deposited in the U.S. mail or with a courier service in the manner described above. Either party may, at any time, change its Notice Address (other than to a post office box address) by giving the other party written notice of the new address. Notice give by counsel for either party on behalf of such party or by Landlord’s managing agent on behalf of Landlord shall be deemed valid notices if addressed and sent in accordance with the provisions of this Article.

21. Surrender of Premises .

Upon the Expiration Date or termination of Tenant’s right to possession to the Premises, Tenant shall remove Tenant’s Property and Required Removables from the Premises, and quit and surrender the Premises to Landlord, in Good Condition, other than normal wear and tear , broom clean, in tenant ready and serviceable condition, and in good order, condition and repair, free from deferred maintenance and immediate repair obligations, and in compliance with all

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

applicable Laws, including, without limitation, the ADA and all Hazardous Materials Laws. Tenant agrees to engage a licensed property inspector to inspect the Premises prior to delivery to Landlord and ensure that the Property is delivered to Landlord in accordance with the foregoing requirements If Tenant fails to remove any of Tenant’s Property within 24 hours after termination of this Lease or Tenant’s right to possession, Landlord, at Tenant’s sole cost and expense, shall be entitled (but not obligated) to remove and store Tenant’s Property. Landlord shall not be responsible for the value, preservation or safekeeping of Tenant’s Property. Tenant shall pay Landlord, upon demand, the expenses and storage charges incurred. If Tenant fails to remove Tenant’s Property from the Premises or storage, within 30 days after notice, Landlord may deem all or any part of Tenant’s Property to be abandoned and title to Tenant’s Property shall vest in Landlord. The obligations of Tenant under this Section 24 shall survive the expiration or earlier termination of this Lease.

22. Miscellaneous .

22.01 Local Law Provisions – No Estate In Land . This Lease shall create the relationship of Landlord and Tenant between the parties hereto; no estate shall pass out of Landlord. Tenant has only a usufruct, not subject to levy and sale, and not assignable by Tenant except by Landlord’s consent. Neither Landlord nor Tenant shall cause this Lease to be recorded without prior written consent of the party to such recording.

22.02 Governing Law . This Lease shall be interpreted and enforced in accordance with the Laws of the State of Georgia and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of State of Georgia. If any term or provision of this Lease shall to any extent be void or unenforceable, the remainder of this Lease shall not be affected. If there is more than one Tenant or if Tenant is comprised of more than one party or entity, the obligations imposed upon Tenant shall be joint and several obligations of all the parties and entities, and requests or demands from any one person or entity comprising Tenant shall be deemed to have been made by all such persons or entities. Notices to any one person or entity shall be deemed to have been given to all persons and entities.

22.03 Specially Designated Nationals List (SDN) . Tenant represents and warrants to Landlord that each individual executing this Lease on behalf of Tenant is authorized to do so on behalf of Tenant and that Tenant is not, and the entities or individuals constituting Tenant or which may own or control Tenant or which may be owned or controlled by Tenant are not, (i) in violation of any Laws relating to terrorism or money laundering, or (ii) among the individuals or entities identified on any list compiled pursuant to Executive Order 13224 for the purpose of identifying suspected terrorists or on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx or any replacement website or other replacement official publication of such list.

22.04 Attorney’s Fees. If either party institutes a suit against the other for violation of or to enforce any covenant, term or condition of this Lease, the prevailing party shall be entitled to reimbursement of all of its costs and expenses, including, without limitation, reasonable attorneys’ fees. Landlord and Tenant hereby waive any right to trial by jury in any proceeding based upon a breach of this Lease. No failure by either party to declare a default immediately upon its occurrence, nor any delay by either party in taking action for a default, nor Landlord’s acceptance of Rent with knowledge of a default by Tenant, shall constitute a waiver of the default, nor shall it constitute an estoppel.

22.05 Force Majeure . Whenever a period of time is prescribed for the taking of an action by Landlord or Tenant (other than the payment of Rent or other monetary amount), the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist acts, civil disturbances and other causes beyond the reasonable control of the performing party (“ Force Majeure ”).

22.06 Assignment by Landlord . Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations under this Lease and in the Building and Property. Upon any such transfer Landlord shall be released from any further obligations hereunder and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations, provided that, any successor pursuant to a voluntary, third party transfer (but not as part of an involuntary transfer resulting from a foreclosure or deed in lieu thereof) shall have assumed Landlord’s obligations under this Lease.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

22.07 Copy of Lease . Landlord has delivered a copy of this Lease to Tenant for Tenant’s review only and the delivery of it does not constitute an offer to Tenant or an option. Tenant represents that it has not dealt with any broker in connection with this Lease. Tenant shall indemnify and hold Landlord and the Landlord Related Parties harmless from Tenant’s breach of the foregoing representation.

22.08 Time is of the Essence . Time is of the essence with respect to Tenant’s obligations under this Lease. The expiration of the Term, whether by lapse of time, termination or otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue after the expiration or termination of this Lease.

22.09 Peaceful Enjoyment . Tenant may peacefully have, hold and enjoy the Premises, subject to the terms of this Lease, provided Tenant pays the Rent and fully performs all of its covenants and agreements. This covenant shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Building.

22.10 No Other Rights . This Lease does not grant any rights to light or air over or about the Property or the Building. Landlord excepts and reserves exclusively to itself any and all rights not specifically granted to Tenant under this Lease, including, without limitation, the right to install one or more cell towers on the Building or Premises and to lease the cell tower space to other tenants, grant easement rights, parking or other access rights to other parties, as long as such grants do not interfere with Tenant’s business operations. Landlord shall also have the exclusive right, at Landlord’s expense (for its own use and to permit third parties) to install, maintain, operate and lease any communications equipment, and systems, including without limitation, satellite dish and associated cables and equipment and/or cell phone towers or for any other use which does not unreasonably interfere with Tenant’s use, on the roof of the Building or any other portion of the Premises.

22.11 Accord and Satisfaction . No payment by Tenant or receipt by Landlord of a lesser amount than the Rent or other amounts herein stipulated shall be deemed to be other than on account of the stipulated Rent and amounts due, nor shall any endorsement or statement on any check or any letter accompanying any check or payment thereof be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord’s right to recover the balance of such amounts or pursue any other remedy provided in this Lease.

22.12 Entire Agreement . This Lease constitutes the entire agreement between the parties and supersedes all prior agreements and understandings related to the Premises, including all lease proposals, letters of intent and other documents. Neither party is relying upon any warranty, statement or representation not contained in this Lease. This Lease may be modified only by a written agreement signed by an authorized representative of Landlord and Tenant.

22.13 Partial Invalidity . If any term or provision of this Lease or the application thereof to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and be enforceable to the fullest extent permitted by law.

22.14 Memorandum of Lease . Neither this Lease nor any memorandum of this Lease shall be recorded.

22.15 Landlord’s Discretion . Except as otherwise expressly stated in this Lease, any consent or approval required to be obtained from Landlord may be granted by Landlord in its sole discretion. In any instance in which Landlord agrees not to act unreasonably, Tenant hereby waives any claim for damages against or liability of Landlord that Tenant may have based upon any assertion that Landlord has unreasonably withheld or unreasonably delayed any consent or approval requested by Tenant, and Tenant agrees that its sole remedy shall be an action or proceeding to enforce any related provision or for specific performance, injunction or declaratory

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

judgment. If with respect to any required consent or approval Landlord is required by the express provisions of this Lease not to unreasonably withhold or delay its consent or approval, and if it is determined in any such proceeding referred to in the preceding sentence that Landlord acted unreasonably, the requested consent or approval shall be deemed to have been granted; however, Landlord shall have no liability whatsoever to Tenant for its refusal or failure to give such consent or approval. Tenant’s sole remedy for Landlord’s unreasonably withholding or delaying consent or approval shall be as provided in this Section.

[ Signatures Follow ]

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

Landlord and Tenant and have executed this Commercial Lease Agreement as of the day and year first above written.


LANDLORD :

RONALD D ORDWAY

By:

TENANT :

VIDEO DISPLAY CORPORATION , a Georgia corporation

By:
		Ronald D. Ordway Chief Executive Officer

Tenant’s Tax ID Number ( FEIN):

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

EXHIBIT B

TENANT INSURANCE REQUIREMENTS

Tenant shall maintain in full force and effect at all times and shall provide to Landlord proof of the following insurance coverage, on ACORD Evidence of Commercial Property Insurance forms:

(a) Property . “All Risk” insurance against fire with extended coverage, vandalism, malicious mischief and all risk endorsements (Special Form), including windstorm coverage and terrorism insurance, in an amount adequate to cover the full replacement value of the Building, all trade fixtures, fittings, installations, decorations, improvements, Alterations (including without limitation any Initial Alterations), betterments, furnishings, contents and signs, plate glass on the Premises, in the event of fire or other casualty.

(b) Liability . Commercial general liability insurance with respect to the Premises, the Easement Areas, the sidewalks and walkways, if any, abutting and adjoining the Premises,

(c) including coverage for bodily injury, personal injury and death, property damage and contractual liability (including “ Insured Contracts ”) recognizing provisions of this Lease, written on an occurrence form with limits of not less than One Million ($1,000,000.00) Dollars for each occurrence and Two Million ($2,000,000.00) Dollars general aggregate per

(d) Business Interruption (Rent Loss) Insurance . Business interruption insurance to cover rent losses due to fire and other hazards, fully compensating for the amount of charges and additional rent owed to Landlord by Tenant for a period of not less than eighteen (18) months. The coverage will be “All Risk” as stated in the above paragraph (a).

(e) Flood . If any portion of the Property is located in a Special Flood Hazard Area as designated by the Federal Emergency Management Agency (FEMA) , flood insurance in the maximum insurance amount available for the Property under the appropriate National Flood Insurance Administration program. The flood insurance requirement will be waived if the Tenant obtains and provides a letter from FEMA stating that the flood map has been amended to remove the Property entirely from a Special Flood Hazard Area.

(f) Plate Glass . If the Premises contain plate glass, plate glass insurance covering all plate glass at the Premises.

Such insurance shall be written by one or more insurance companies authorized to issue such in the State of Georgia and which have an “S&P” rating of “A” or better (or “A.M. Best” rating of “A” or better, if the carrier is not rated by S&P), or an equivalent rating by another recognized rating organization acceptable to Landlord. There shall be delivered to Landlord a certificate or certificates of each such insurance and of all renewals and replacements thereof with proof satisfactory to Landlord or payment of premiums therefor. All such policies (i) shall name Landlord, and its managing agent as additional insureds and any other party reasonably requested by Landlord; (ii) shall contain a provision that they may not be cancelled or amended without at least thirty (30) days’ prior written notice to Landlord; (iii) shall be procured and maintained at the sole cost and expense of Tenant; and (iv) shall be primary and non-contributing. In the event that Tenant fails to procure or maintain any insurance pursuant to this Section, Landlord may but is not obligated to obtain same on behalf of Tenant and any premiums paid by Landlord therefor shall be deemed Additional Rent to be paid by Tenant to Landlord within ten (10) days after demand therefor.

Commercial Lease Agreement

Video Display Corporation

1868 Tucker Industrial Road, Tucker, Georgia

B-1

Exhibit 10(g)

LEASE AGREEMENT

This LEASE AGREEMENT (the “ Lease ”) is made and entered into this 20th day of Feb., 2015, by and between Ordway Properties LLC, a Georgia LLC (“ Landlord ”), with an address of 1868 Tucker Industrial Road, Tucker GA 30084, and Video Display Corporation, a Georgia corporation (“ Tenant ”) with an address of 1868 Tucker Industrial Road, Tucker, Georgia 30084.

Leased Property . For and in consideration of the rents, covenants and agreements hereinafter set forth, Landlord hereby leases to Tenant the real property described on Exhibit “A” , attached hereto and incorporated herein by reference, together with all improvements located thereon and all easements and rights appurtenant thereto (hereinafter collectively called the “ Leased Property ”).

1. Term . The term of this Lease shall be ten (10) years, commencing on February 20, 2015 (the “ Commencement Date ”), and ending on February 19, 2025, both dates inclusive, unless sooner terminated or extended as herein provided (such term, as extended, the “ Lease Term ”). The term “ Lease Year ”, as used herein, shall mean the period of time from the Commencement Date through the end of the twelfth (12th) full calendar month after the Commencement Date, and each succeeding twelve (12) month period thereafter. Thus, the first Lease Year shall consist of twelve (12) complete calendar months, plus any additional days between the Commencement Date and the end of the month in which the Commencement Date falls, unless the Commencement Date falls on the first (1st) day of the month, in which case, the first Lease Year shall be twelve (12) complete calendar months from and after the Commencement Date.

(a) Option to Extend . Tenant shall have the right, privilege and option to extend the term of this Lease for three (3) successive periods of one (1) year each under the same terms and conditions of this Lease then in effect. Tenant, if it elects to exercise any option, shall do so by giving Landlord written notice at least thirty (30) days prior to the expiration of the initial Lease Term or the then-current Option Period, as the case may be.

(b) Month to Month Tenancy . If Tenant shall remain in possession of the Leased Property after the expiration of the Lease Term and without any express agreement of the parties hereto, Tenant shall be a month-to-month tenant upon all the same terms and conditions as contained in this Lease, including, without limitation, the payment of rent, which shall be based on that rate in effect during the last month of the preceding term.

2. Rent .

(a) This Lease shall be treated as a triple net lease in which the Tenant shall be responsible for all expenses of the leased facilities, whatever they may be, and shall promptly pay for any and all expenses incurred during the Term. Tenant shall pay to Landlord in lawful money of the United States, at the beginning of the Lease Term, in one payment of Twenty Thousand Twenty Nine Dollars ($20,029) in advance of the first

day of the lease term hereof, and monthly rental payments in advance in the amount of Fifteen Thousand Eight Hundred and Twelve Dollars and Fifty Cents ($15,812.50) during the initial term and any extension of the initial lease term hereof. (the “ Net Rent ”).

(b) If Landlord fails to receive all or any portion of the monthly Net Rent within ten (10) days after it becomes due, Tenant shall pay Landlord as additional rent, a late charge equal to five percent (5%) of the overdue amount. Tenant and Landlord agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of such late payment.

(c) During the term and any extensions hereof, Tenant shall pay all utility bills for the electrical requirement and heating (HVAC) requirements of the leased facility

(d) Tenant agrees to cause all real property taxes and assessments applicable to the Leased Property to be paid before the same become delinquent.

(e) Tenant agrees to cause all insurance premiums for all property, casualty, liability and flood insurance, if required,

3. Use . Tenant may use and occupy the Leased Property for any lawful purpose. Tenant shall not use or knowingly permit any part of the Leased Property to be used for any unlawful purpose.

4. Quiet Enjoyment . Tenant, upon paying the Net Rent and all additional rent and other charges herein provided for and performing all the other terms of this Lease, shall quietly have and enjoy the Leased Property during the term of this Lease and any extensions thereof without hindrance or molestation by anyone claiming by, through, or under Landlord.

5. Maintenance and Repairs .

(a) Tenant’s Repairs . Tenant shall be responsible for all repairs to the premises including those caused by the negligence or willful acts or omissions of Tenant, its agents, employees, or contractors, Tenant shall, at its own expense, maintain and make all necessary repairs and replacements to the Leased Property and to the window glass, fixtures and all other appliances and appurtenances belonging thereto and all equipment used in connection with the Leased Property (including, without limitation, the HVAC system, mechanical, electrical and plumbing systems) both internal to the Leased Property and external to the Leased Property ( i.e. , the leads from the tie-ins to the public utilities to the improvements located on the Leased Property). Such repairs and replacements shall be made promptly as and when necessary and in a good and workmanlike manner. On default of Tenant in making such repairs or replacements, Landlord may, but shall not be required to, make such repairs and replacements for Tenant’s account, and the reasonable expense thereof (actually incurred) shall constitute and be collectible as additional rent.

6. Compliance with Law . Except as otherwise provided in Section 6(b) of this Lease, Tenant shall, throughout the term of this Lease, at its sole expense, promptly comply with all laws and regulations of all federal, state, county and municipal governments and appropriate departments, commissions, boards and offices thereof, and the orders and regulations of the National Board of Fire Underwriters, or any other body now or hereafter exercising similar functions, which may be necessary by reason of Tenant’s use or occupancy of the Leased Property or operation of its business. Tenant shall be responsible for any and all costs and expenses arising from any violations of environmental laws or regulations caused by Tenant’s activities or occupancy of the Leased Property. Tenant’s responsibility to make those repairs, replacements, modifications, alterations, installations, additions and improvements to the Leased Property required by laws, regulations, governmental orders and insurance requirements shall be limited to those instances where caused by the special or extraordinary use by Tenant of the Leased Property, as opposed to the scope of normal warehouse or commercial use

7. Surrender of the Leased Property . Tenant shall, on the last day of the Lease Term, or upon the sooner termination of this Lease, peaceably and quietly surrender the Leased Property to Landlord in as good condition and repair as at the commencement of the term, natural wear and tear of each and damage from casualty or governmental taking excepted. Any trade fixtures or personal property belonging to Tenant or to any subtenant, if not removed at such termination, and if Landlord shall so elect, shall be deemed abandoned and become the property of Landlord without any payment or offset therefor.

8. Alterations, Additions and Improvements .

(a) Tenant shall be allowed to make any material structural alterations, additions or improvements to the Leased Property with the prior consent of Landlord, which consent shall not be unreasonably withheld, conditioned, or delayed and shall be deemed given if not denied in writing with specific reasons therefor within fifteen (15) days after written request therefor. Any alteration, addition or improvement made by Tenant after such consent shall be completed in a good and workmanlike manner and in accordance with all applicable codes and regulations. Except as otherwise set forth in the immediately preceding sentence, Tenant may make any other alterations, additions or improvements to the Leased Property as Tenant may elect, all at its sole cost and expense, provided that Tenant does so in a good and workmanlike manner and in accordance with all applicable codes and regulations. All alterations, additions and improvements made pursuant to this Section 9(a) shall be surrendered with the Leased Property upon the expiration or earlier termination of the Lease Term and shall thereupon become the property of Landlord without any compensation to Tenant.

(b) Tenant shall indemnify Landlord against and hold Landlord harmless from any mechanic’s lien or other lien arising out of the making of any alterations, repairs, additions or improvements by Tenant.

9. Events of Default . Any of the following circumstances shall be deemed a “ Default ” or “ Event of Default ” by Tenant.

(a) If Tenant shall fail to make any payment of any Net Rent and such failure is not cured within ten (10) days after written notice from Landlord;

(b) If Tenant shall fail in the performance of any covenant of this Lease (other than the covenant for the payment of Net Rent) and if such default is not cured within thirty (30) days after written notice thereof has been given to Tenant by Landlord; or, if such failure shall be of such nature that it cannot be cured completely within such thirty (30) day period, if Tenant shall not have promptly commenced to cure the default within such thirty (30) day period or shall not thereafter proceed with reasonable diligence and in good faith to remedy such default;

(c) If Tenant shall be adjudicated bankrupt, make a general assignment for the benefit of creditors, or if a permanent receiver or trustee in bankruptcy shall be appointed for Tenant’s property and such appointment is not vacated within ninety (90) days; or if Tenant shall file a petition seeking relief under any bankruptcy or creditors’ rights laws; or if such a petition shall be filed against Tenant and the same shall not have been dismissed within ninety (90) days.

10. Breach/Default by Tenant; Remedies of Landlord . Upon the occurrence of an Event of Default, Landlord shall have the option, subject to any applicable cure periods to do any one of the following:

(a) Landlord may (but shall not be obligated to) cure such Default on behalf of and at the expense of Tenant, and Tenant shall reimburse Landlord for any and all reasonable sums so expended by Landlord. Such expenses shall include, but shall not be limited to, reasonable attorneys’ fees actually incurred and the reasonable costs of instituting, prosecuting or defending any action or proceeding instituted by reason of such Default by Tenant (provided Landlord prevails in such action or proceeding). Should Tenant, pursuant to the terms of this Lease, become obligated to reimburse or otherwise pay to Landlord any sum of money in addition to the specific rent herein provided for, then the amount thereof shall be deemed additional rent and may, at Landlord’s option, be added to and collected as part of any subsequent installment of the specific rent due and payable hereunder.

(b) Landlord may terminate Tenant’s right of possession or this Lease, by written notice to Tenant specifying the date of termination in such notice, and, on or after such date, enter upon and take possession of the Leased Property and expel or remove Tenant and any other person who may be occupying said Leased Property or any part thereof, by entry, dispossessory suit or otherwise, without thereby releasing Tenant from any liability hereunder; and, if Landlord so elects, Landlord may make such alterations, redecoration and repairs as Landlord, in its reasonable judgment, may deem necessary to relet the Leased Property, and Landlord may relet the Leased Property or any portion thereof for such term or terms and at the best price obtainable by reasonable effort and upon such other terms and conditions as Landlord in its sole discretion may deem advisable, with or without advertisement, or by private negotiations. Upon each such reletting, all rentals and other sums received by Landlord from such reletting shall be applied: first, to the payment of any indebtedness other than Net Rent due hereunder from Tenant to Landlord; second to the payment of any reasonable costs and expenses of such reletting actually incurred by Landlord, including lease assumptions, reasonable brokerage fees and attorneys’ fees actually incurred; and the residue, if any shall be held

by Landlord and applied in payment of future Net Rent as the same may become due and payable hereunder. Notwithstanding anything to the contrary contained herein, in the event the term of such subsequent lease extends beyond the then-current Lease Term, Tenant shall have no obligations whatsoever with respect to or under such extended period. Tenant shall be responsible to Landlord for any delinquency between the Net Rent and additional rental due hereunder and amounts received by Landlord from such reletting during the remainder of the then-current Lease Term; however, Tenant shall not be entitled to any excess realized by Landlord.

(c) Pursuit of any of the foregoing remedies shall not preclude pursuit of any other remedies herein provided or any other remedies provided by law. Landlord shall have the duty to mitigate any possible damages which may be incurred pursuant to any such default by Tenant. Any notice in this provision may be given by Landlord or its attorney.

11. Breach/Default by Landlord; Remedies of Tenant . In the event the Landlord shall fail to comply with any provisions of this Lease which are the responsibility of Landlord to perform and the same have not been fully performed within thirty (30) days after written notice from Tenant (provided, that in the event the default is of such a nature that it cannot be cured within thirty (30) days but is otherwise capable of cure, and Landlord commences such cure within said 30-day period and diligently pursues the same to completion, then Landlord shall have such additional time as may be reasonably necessary to cure such default), then Tenant shall have the option (i) to cure such default for the account of Landlord (without any obligation so to do), in which case, Landlord shall reimburse Tenant the reasonable costs of such cure actually incurred within twenty (20) days after Landlord’s receipt of an invoice therefor; or (ii) to pursue any and all remedies available to it at law and in equity, such remedies being cumulative and not exclusive.

12. Damage to or Destruction of Leased Property . If the Leased Property is totally destroyed by storm, fire, lightning, earthquake or other casualty, this Lease shall terminate as of the date of such destruction, and rental shall be accounted for as between Landlord and Tenant as of that date. If the Leased Property shall be partially damaged or destroyed by such casualty, then Landlord shall deliver to Tenant within thirty (30) days of such casualty a written notice stating the reasonable estimate of time and cost necessary to repair such damage (the “ Damage Notice ”). In the event the Damage Notice indicates that the repairs will require more than sixty (60) days to complete or will cost more money than Landlord is likely to receive from insurance proceeds (unless Landlord pledges in writing to cover any discrepancy between the actual cost to repair such damage and the insurance proceeds Landlord will receive), then Landlord or Tenant shall have the right to terminate this Lease in writing delivered to the other party within thirty (30) days of delivery of the Damage Notice. In the event the Lease is not terminated as provided herein or the Damage Notice indicates that the repairs will likely require sixty (60) days or less to complete and will cost an amount less than or equal to the insurance proceeds Landlord is likely to receive, then, this Lease shall remain in full force and effect, all rental amounts due hereunder (including, without limitation, Net Rent) shall abate until such time as the repairs shall be substantially complete in the proportion the portion of the Leased Property which is untenantable (in Tenant’s reasonable opinion) bears to the total Leased Property, and Landlord shall complete such repairs within sixty (60) days after the date of the Damage Notice.

13. Insurance .

(a) Throughout the term of this Lease and any extensions thereof, Tenant shall carry at its sole expense, and maintain in full force and effect, fire and extended coverage insurance on the buildings of the Leased Property in an amount at least equal to their replacement value. Throughout the term of this Lease and any extensions thereof, Tenant shall carry at its sole expense, and maintain in full force and effect, fire and extended coverage insurance on Tenant’s contents, furniture, fixtures, equipment, and other property removable by Tenant under the provisions of this Lease.

(b) Throughout the term of this Lease and any extensions thereof, Tenant shall carry at its sole expense, and maintain in full force and effect, general liability insurance insuring Tenant and Landlord in an amount not less than $1,000,000.00 combined single limit from a carrier reasonably satisfactory to Landlord.

(c) Landlord and Tenant each waive, and each insurance policy carried by either Landlord or Tenant shall contain a provision whereby the insured and insurer thereunder waive, any rights of subrogation against the other party on account of any loss or damage insured against under such policy, provided that such waiver of the right of subrogation shall not be operative in any case where the effect is to invalidate such insurance coverage.

(d) To the fullest extent permitted by law, Landlord and Tenant each waive all right of recovery against the other for, and agree to release the other from liability for, loss or damage to the extent such loss or damage is covered by valid and collectible insurance in effect at the time of such loss or damage or which is required to be covered pursuant to the terms of this Lease, provided, however, that the foregoing release by each party shall not apply to the extent of any deductible paid by either party under the terms of such party’s insurance policy (up to a maximum of $5,000.00); provided, further, however, that the foregoing release by each party is conditioned upon the other party carrying insurance with the above-described waiver of subrogation, and if such coverage is not obtained or maintained by either party, then the other party’s foregoing release shall be deemed to be rescinded until such waiver is either obtained or restated.

(e) All policies of insurance required under this Lease (i) shall be written by insurers reasonably acceptable by Landlord and Tenant which are licensed to do business in the state in which the Leased Property is located, and (ii) shall contain provisions obligating the insurer to notify the Landlord and Tenant in writing at least thirty (30) days prior to any change, cancellation, or nonrenewal of such policies taking effect. Landlord and Tenant agree to provide the other with copies of all policies required hereunder within fifteen (15) days of a request therefor.

14. Condemnation and Eminent Domain .

(a) If the whole of the Leased Property, or such portion thereof as will make the Leased Property unusable for the purpose herein leased (as determined by Tenant in its reasonable discretion), shall be condemned by any legally constituted authority for any

public use or purpose, or sold under threat of condemnation, then, in any of said events the term hereby granted shall cease from the time when possession or ownership thereof is taken by public authorities and rental shall be accounted for as between Landlord and Tenant as of that date. Such termination, however, shall be without prejudice to the rights of either Landlord or Tenant to recover compensation and damage caused by condemnation from the condemnor. It is further understood and agreed that neither the Tenant, nor Landlord, shall have any rights in any award made to the other by any condemnation.

(b) In the event of a partial taking or condemnation which does not make the Leased Property unusable for the purpose herein leased, so that this Lease is not thereby terminated, (i) Landlord shall repair any damage caused by such taking or condemnation so as to restore the Leased Property as nearly as possible to its condition prior to such taking or condemnation within sixty (60) days after such taking, and the rent and other charges due from Tenant hereunder shall be equitably abated until Landlord completes such repairs, all as provided in Section 13 hereof, and (ii) the rent and other charges due from Tenant hereunder shall be permanently equitably abated to account for any diminution of the Leased Property resulting from such taking or condemnation. If Landlord is unable to complete such repair and restoration within sixty (60) days from the taking, Tenant shall have the right to terminate this Lease.

15. Assignment and Subletting . Tenant may assign or sublet all or any portion of the Leased Property for the remainder of the Lease Term upon the prior written approval of Landlord, which approval Landlord shall not unreasonably withhold, condition, or delay; provided, however, that the business or occupation of the subtenant shall not be extra-hazardous, disreputable or illegal, and provided further that in the case of a sublease only, Tenant shall remain liable for the payment of the Net Rent herein reserved and for the performance of all the other terms of this Lease required to be performed by Tenant. Upon the occurrence of an assignment consented to by Landlord, Tenant shall have no further liability or obligation under this Lease. In the event Landlord shall not have responded to Tenant’s request for consent within twenty (20) days after Tenant’s request therefor together with a detailed explanation of the reasons for any denial of consent, Landlord shall be deemed to have consented to the proposed assignment or subletting.

16. Release of Corporate Agents . In any case where a corporation is or shall be Tenant or Landlord hereunder, no recourse under or upon any obligation, covenant or agreement of this Lease otherwise permitted by any statute or rule of law shall be had against any incorporator, subscriber, stockholder, officer or director, past, present or future, of such corporation, either directly or through the corporation.

17. Notice . Any notice required hereunder by either party to the other shall be in writing and shall be deemed to be duly given only if delivered personally or by a nationally-recognized overnight delivery service, or mailed by certified or registered mail, postage prepaid, addressed to Tenant at the Leased Property, and to Landlord at the address noted on this Lease. Notices shall be effective on the earlier of (i) actual receipt or refusal to accept receipt; (ii) one (1) business day after depositing the same with the overnight delivery service or (iii) three (3) business days after mailing. Delivery to an employee or officer of a party shall be

effective delivery of a notice. Any refusal to accept delivery shall be deemed effective delivery. Any delay in delivery because of a changed address of which no notice has been given shall not affect the effective date of delivery. Any notice may be given by an attorney on behalf of a party. All notice addresses must be in the continental U.S. and all notices must be in the English language.

18. Binding Effect . This Lease shall be binding upon and inure to the benefit of the heirs, legal representatives, successors and assigns of Landlord and Tenant.

19. Governing Law . This Lease shall be construed in accordance with and governed by the laws of the State in which the Leased Property is situated.

20. Time . TIME IS OF THE ESSENCE in this Lease.

21. Hazardous Substances .

(a) Tenant shall not use or suffer the use of the Leased Property as a landfill, or dump, or as a site for storage, treatment, or disposal of “Hazardous Wastes,” “Hazardous Substances” or toxic substances (as such terms are hereinafter defined), except to the extent done so in compliance with all environmental laws. Tenant shall be liable to Landlord for any and all cleanup costs and any and all other charges, fees or penalties relating to Tenant’s use, disposal, transportation, generation or sale of Hazardous Substances on or at the Leased Property. Tenant shall and hereby does agree to pay, protect, defend, indemnify and hold Landlord harmless from and against any and all losses, damages, expenses, fees, claims, costs and liabilities (including, but not limited to reasonable attorneys’ fees actually incurred) arising out of or in any manner related to the presence of “Hazardous Substances” at, on or in the Leased Property which directly results from an act or omission of Tenant during its period of occupancy. The obligations of Tenant under this paragraph shall survive any expiration or termination of this Lease.

(b) As used herein, “ Hazardous Substances ” shall mean any (i) “hazardous waste” as defined by the Resource, Conservation and Recovery Act of 1976 (42 U.S.C. Section 6901 et seq.), as amended, and regulations promulgated thereunder; or (ii) any “hazardous, toxic or dangerous waste, substance or material” specifically defined as such in (or for the purposes of) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Section 9601 et seq.), as amended, and regulations promulgated thereunder.

(c) Tenant shall not in any manner be liable for, required to contain, remediate, remove or clean up, bear any costs or expenses regarding or have any responsibility whatsoever with respect to, nor does Tenant indemnify Landlord or any other party regarding, any Hazardous Wastes, Hazardous Substances, or toxic substances, materials or wastes or other environmental contaminants which either (i) were already on the Leased Property prior to the term of this Lease or (ii) are brought, generated, emitted, discharged, released, spilled or disposed of on or from the Leased Property at any time whatsoever by any persons, entities or parties other than Tenant or Tenant’s employees, agents, contractors, or invitees. Landlord agrees to indemnify and hold Tenant harmless

from and against any and all losses, damages, expenses, fees, claims, costs, and liabilities (including, but not limited to reasonable attorneys’ fees actually incurred) arising out of or in any manner caused by (i) or (ii) above or by Landlord, its agents, employees, or contractors.

22. Landlord’s Liability . The liability of Landlord hereunder shall be limited to its interest in the Leased Property.

23. Subordination . This Lease shall be subject and subordinate to any bona fide present or future mortgage placed upon the Leased Property by Landlord, provided such mortgagee agrees in writing that the possession of Tenant during the remainder of the Lease Term shall not be disturbed despite any foreclosure or other action by such mortgagee, provided Tenant is not in default hereunder. As to any mortgage, security deed or deed of trust encumbering the Leased Property as of the date of this Lease, Landlord covenants to deliver such an agreement to Tenant, in form and substance reasonably acceptable to Tenant, within ten (10) days after the date of this Lease.

24. Removal of Fixtures . Tenant may, prior to the expiration of the Lease Term, remove all fixtures and equipment which Tenant has placed on the Leased Property, provided Tenant repairs all damage to the Leased Property caused by such removal; provided, however, Tenant shall not remove, under any circumstances, the following: heating, ventilating, air conditioning, plumbing, electrical and lighting systems and fixtures or dock levelers.

25. Title and Authority . Landlord represents and warrants to Tenant that (a) Landlord holds good title to the Leased Property and has full power and authority to make this Lease and (b) there are no encumbrances, easements, covenants or restrictions on the Leased Property which would prevent or materially interfere with Tenant’s use and enjoyment of the Leased Property as contemplated by this Lease.

26. Memorandum of Lease . Upon the request of either party, Landlord and Tenant shall mutually execute and deliver a notice, memorandum or short form of this Lease in recordable form and either party may record such instrument in the applicable registry of deeds. The cost of such recording shall be borne by the party requesting the same.

27. Miscellaneous .

(a) Each party shall itself bear all costs and expenses of fulfilling its obligations under this Lease, except only where specifically provided herein to the contrary.

(b) This Lease contains the entire agreement of the parties hereto, and no representations, inducements, promises or agreements, oral or otherwise, between the parties, not embodied herein, shall be of any force or effect. This Lease supersedes any prior or contemporary discussions between the parties hereto with respect to the matters contained herein.

(c) If any term, covenant or condition of this Lease or the application thereof to any person, entity or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, covenant or condition to persons, entities or circumstances other than those which render the same invalid or unenforceable shall not be affected thereby, and each term, covenant or condition of this Lease shall be valid and enforceable to the fullest extent permitted by law.

(d) No modification of this Lease shall be effective unless made in writing and signed by Landlord and Tenant.

(e) In the event either Landlord or Tenant shall retain the services of an attorney to enforce any provision of this Lease, the prevailing party shall be reimbursed by the other in the amount of its reasonable attorneys’ fees and other costs actually incurred.

(f) Landlord and Tenant agree to provide to the other, within twenty (20) days after a written request therefor, an estoppel certificate certifying that this Lease is in full force and effect, that the same has not been amended (or, if it has, stating the amendments which have been made), that, to its actual knowledge, there are no defaults under this lease (or, if there are, specifying such defaults), and such other matters as may reasonably be requested.

(g) Tenant shall place no signs upon the outside walls or roof of the Leased Property except with the written consent of Landlord. Any and all signs placed on the Leased Property by Tenant shall be maintained in compliance with governmental rules and regulations governing such signs, and Tenant shall be responsible to Landlord for any damage caused by installation, use or maintenance of said signs, and all damage incident to such removal.

(h) Landlord may card the Leased Property “For Rent” or “For Sale” ninety (90) days before the termination of this Lease. Landlord may enter the Leased Property at reasonable hours to exhibit the Leased Property to prospective purchasers or tenants, to inspect the leased Property to see that Tenant is complying with all of its obligations hereunder, and to make repairs required of Landlord under the terms hereof or to make repairs to Landlord’s adjoining property, if any.

[Signatures on the following page]

IN WITNESS WHEREOF, the parties have executed and delivered this Lease under seal as of the day and year first above written.

LANDLORD:


Ordway Properties LLC

By:
Name:		Jonathan R. Ordway
Title:		Member

TENANT:


Video Display Corporation

By:
Name:		Gregory Osborn
Title:		Chief Financial Officer

EXHIBIT “A”

Physical address of 5155 King Street, Cocoa, FL

Consisting of a 34,500 square foot industrial office/warehouse/manufacturing facility

Exhibit 21

Video Display Corporation

Subsidiary Companies

VDC Display Systems, Inc

7177 North Atlantic Avenue

Cape Canaveral, Florida 32920

AYON CyberSecurity, Inc.

2350 Commerce Park Drive

Palm Bay, Florida 32905

Teltron Technologies, Inc.

1868 Tucker Industrial Road

Tucker, Georgia 30084

Lexel Imaging Systems

1500 Bull Lea Road, Suite 150

Lexington, Kentucky 40511

AYON Visual Solutions

1868 Tucker Industrial Rd.

Tucker, Georgia 30084

Exhibit 23.1

Attachment B

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in Registration Statements (No. 333-15337 and No. 333-138076) on Form S-8 of Video Display Corporation of our report dated May 22, 2015 relating to our audits of the consolidated financial statements which appear in this Annual Report on Form 10-K of Video Display Corporation as of and for each of the years in the two-year period ended February 28, 2015.

/s/ Carr, Riggs & Ingram, LLC

Atlanta, Georgia

May 29, 2015

Exhibit 31.1

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald D. Ordway, certify that:

I have reviewed this annual report on Form 10-K of Video Display Corporation;

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15f and 15d-15f ) for the registrant and have:

designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.


Date: May 29, 2015				/s/ Ronald D. Ordway
				Ronald D. Ordway
				Chief Executive Officer

Exhibit 31.2

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gregory L. Osborn, certify that:

I have reviewed this annual report on Form 10-K of Video Display Corporation;

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.


Date: May 29, 2015				/s/ Gregory L. Osborn
				Gregory L. Osborn
				Chief Financial Officer

Exhibit 32.1

CERTIFICATION

PURSUANT TO SECTION 906

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C SECTION 1350)

The undersigned, as the Chief Executive Officer of Video Display Corporation, certifies that, to the best of his knowledge and belief, the Annual Report on Form 10-K for the fiscal year ended February 28, 2015 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Video Display Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.


This 29 ^th day of May, 2015				/s/ Ronald D. Ordway
				Ronald D. Ordway
				Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Video Display Corporation and will be retained by Video Display Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION

PURSUANT TO SECTION 906

THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C SECTION 1350)

The undersigned, as the Chief Financial Officer of Video Display Corporation, certifies that, to the best of his knowledge and belief, the Annual Report on Form 10-K for the fiscal year ended February 28, 2015 (the “Report”), which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Video Display Corporation at the dates and for the periods indicated. The foregoing certification is made pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) and shall not be relied upon for any other purpose.


This 29 ^th day of May, 2015				/s/ Gregory L Osborn
				Gregory L Osborn
				Chief Financial Officer

The information in this Exhibit 32.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.