<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                  FORM 10-Q/A

                       QUARTERLY REPORT UNDER SECTION 13
                    OF THE SECURITIES EXCHANGE ACT OF 1934



For Quarter Ended MAY 31, 1996                  Commission File Number 0-13394



                           VIDEO DISPLAY CORPORATION
            (Exact name of registrant as specified on its charter)



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



              1868 TUCKER INDUSTRIAL DRIVE, TUCKER, GEORGIA 30084
                   (Address of principal executive offices)



Registrant's telephone number including area code:      770-938-2080


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 13 of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes   X       No
                                      ___          ___


Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:


          Class                                   Outstanding at May 31, 1996
--------------------------                        ---------------------------
Common Stock, No Par Value                                  3,907,413
<PAGE>
 
                           VIDEO DISPLAY CORPORATION


                                     INDEX


                                                                    PAGE
PART I.    FINANCIAL INFORMATION

           Item 1.  Financial Statements (unaudited)
             Consolidated balance sheets - May 31, 1996 and
              February 29, 1996                                      3-4

             Consolidated statements of operations -
              Three months ended May 31, 1996 and 1995                 5

             Consolidated statements of shareholders' equity -
              May 31, 1996 and February 29, 1996                       6

             Consolidated statements of cash flows - Three
              months ended May 31, 1996 and May 31, 1995             7-8

             Notes to consolidated financial statements -           9-11
              May 31, 1996

           Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations         12-13

 PART II.  OTHER INFORMATION

           Item 1.  Legal Proceedings                                 14
           Item 2.  Changes in Securities                             14
           Item 3.  Defaults upon its Senior Securities               14
           Item 4.  Submission of Matters to a Vote of
                       Security Holders                               14
           Item 5.  Other information                                 14
           Item 6.  Exhibits and reports on Form 8-K                  14
 
 
SIGNATURES
 
<PAGE>
 
                   VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                     ASSETS
                                        
<TABLE>
<CAPTION>
                                                                     AS RESTATED
                                                                       MAY 31,               February 29,
                                                                        1996                     1996
                                                               -----------------------  -----------------------
                                                                      UNAUDITED                (NOTE B)
<S>                                                            <C>                      <C>
Assets
Current assets:
  Cash and cash equivalents (including
   restricted cash of $72,000 and $63,000)                               $  1,253,000              $ 1,057,000
  Notes and accounts receivable, less
   allowance for possible losses of $139,000                                5,231,000                5,039,000
  Receivable from affiliates                                                      ---                  558,000
  Note receivable, net of unamortized discount
       of $36,000 and $33,000, respectively (Note C)                          144,000                  144,000
  Inventories:
   Raw materials                                                            3,896,000                3,272,000
   Finished goods                                                          17,244,000               16,178,000
  Prepaid expenses                                                            340,000                  276,000
  Deferred income taxes                                                       497,000                  497,000
                                                                         ------------              -----------
Total current assets                                                       28,605,000               27,021,000
 
Property, plant and equipment:
  Land                                                                        435,000                  355,000
  Buildings                                                                 3,886,000                3,606,000
  Machinery and equipment                                                  12,313,000               11,862,000
                                                                         ------------              -----------
                                                                           16,634,000               15,823,000
 
  Accumulated depreciation and amortization                               (11,598,000)              11,307,000
                                                                         ------------              -----------
                                                                            5,036,000                4,516,000
 
Investments (note C)                                                          663,000                  622,000
 
Note receivable, net of unamortized discount of
  $104,000 and $146,000 and allowance for possible
  losses of $321,000                                                          694,000                  730,000
 
Excess of cost over net assets acquired, net of
  accumulated amortization of $759,000 and $729,000                         1,339,000                1,369,000
 
Other assets                                                                  178,000                  161,000
                                                                         ------------              -----------
 
Total assets                                                             $ 36,515,000              $ 34,419,00
                                                                         ============              ===========
</TABLE>
                                        
        The accompanying notes are an integral part of these statements.


                                       3
<PAGE>
 
                   VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS - CONTINUED
                      LIABILITIES AND SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                               AS RESTATED
                                                                 MAY 31,               February 29,
                                                                  1996                     1996
                                                         -----------------------  -----------------------
                                                                UNAUDITED                (NOTE B)
 
<S>                                                      <C>                      <C> 
Liabilities and Shareholders' Equity
Current liabilities:
   Note payable (note E)                                            $ 9,227,000              $ 9,089,000
   Notes payable to officers and shareholders
    (Note E)                                                          1,182,000                  220,000
   Accounts payable                                                   3,957,000                2,457,000
   Accrued liabilities                                                1,490,000                1,878,000
   Current maturities of long-term debt (Note E)                      1,384,000                1,381,000
                                                                    -----------              -----------
Total current liabilities                                            17,240,000               15,025,000
 
Long-term debt (Note E)                                               2,022,000                2,340,000
Deferred income taxes                                                   403,000                  403,000
Minority interests                                                      379,000                  372,000
 
Commitments and contingencies                                               ---                      ---
 
Shareholders' equity
   Preferred stock, no par value - shares
       authorized 2,000,000; none issued and
       outstanding                                                          ---                      ---
   Common stock, no par value - shares
       authorized 10,000,000; issued and
       outstanding shares 3,907,000                                   3,529,000                3,529,000
   Additional paid-in capital                                            81,000                   81,000
   Retained earnings                                                 13,908,000               13,655,000
   Net unrealized gain (loss) on marketable                             100,000                  200,000
       equity securities
   Currency translation adjustments                                  (1,147,000)              (1,186,000)
                                                                    -----------              -----------
 
   Total shareholders' equity                                        16,471,000               16,279,000
                                                                    -----------              -----------
 
Total liabilities and shareholders' equity                          $36,515,000              $34,419,000
                                                                    ===========              ===========
 
</TABLE>

        The accompanying notes are an integral part of these statements.


                                       4
<PAGE>
                   VIDEO DISPLAY CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     For the Fiscal Quarters Ended May 31,
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                             AS RESTATED
                                                1996            1995
                                             -----------     -----------
<S>                                          <C>             <C>
Net sales                                    $12,098,000     $11,951,000

Cost of goods sold                             8,059,000       7,462,000
                                             -----------     -----------

   Gross profit                                4,039,000       4,489,000

Operating expenses:

   Selling and delivery                          941,000       1,152,000
   General and administrative                  2,436,000       2,244,000
                                             -----------     -----------
                                               3,377,000       3,396,000
   Operating profit                              662,000       1,093,000

Other income (expense)
   Interest expense                             (283,000)       (292,000)
   Other, net                                     10,000          12,000
                                             -----------     -----------
                                                (273,000)       (280,000)
   Income before minority interest               389,000         813,000

Minority interest                                  5,000           1,000
                                             -----------     -----------

   Income before income taxes                    384,000         812,000

Income taxes                                     131,000         215,000
                                             -----------     -----------

   Net Income                                $   253,000     $   597,000
                                             ===========     ===========

Earnings per share of common stock           $      0.07     $      0.15
                                             ===========     ===========

Weighted average shares outstanding            3,907,000       4,088,000
                                             ===========     ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 
                   Video Display Corporation and Subsidiaries
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
               For the Twelve Months Ended February 29, 1996 and
                      the Three Months Ended May 31, 1996
                                  as restated

                                        


<TABLE>
<CAPTION>
                                                                                                                     Net Unrealized
                                                                                                                        Loss on
                                                                                    Foreign                            Noncurrent
                                                                                   Currency          Additional        Marketable
                                        Common                Retained            Translation          Paid In           Eauity
                                        Stock                 Earnings            Adjustments          Capital         Securities
                                ----------------------  --------------------  -------------------  ---------------  ----------------

<S>                            <C>                     <C>                   <C>                  <C>              <C>
Balance at February 28,   
 1995                                      $3,821,000            $11,876,000         $(1,020,000)              ---        $ (81,000)

Net earnings for year                             ---              1,779,000                 ---               ---              ---
Contribution of capital
 from gain realized on
 sale of stock by
 officer                                          ---                    ---                 ---               ---              ---
Repurchase and etirement
 of 168,000 shares of
 common stock                                (292,000)                   ---                 ---           $81,000              ---
Currency translation
 adjustment                                       ---                    ---            (166,000)              ---              ---
Net unrealized loss on                                                                                         
 noncurrent marketable        
 equity securities                                ---                    ---                 ---               ---          281,000
                                ---------------------   --------------------  ------------------   ---------------  --------------- 

Balance at February 28,   
 1996                                      $3,529,000            $13,655,000         $(1,186,000)          $81,000        $ 200,000
 
Net income   for quarter                          ---                253,000                 ---               ---              ---
Currency translation
 adjustment                                       ---                    ---              39,000               ---              ---
Unrealized gain on
 marketable equity
 securities                                       ---                    ---                 ---               ---         (100,000)

                                ---------------------   --------------------  ------------------   ---------------  --------------- 

                                           $3,529,000            $13,908,000         $(1,147,000)          $81,000        $ 100,000
                                =====================   ====================  ==================   ===============  ===============
</TABLE>

        The accompanying notes are an integral part of these statements.
                                        

                                       6
<PAGE>
 
                           VIDEO DISPLAY CORPORATION
                           STATEMENTS OF CASH FLOWS
                      For the Three Months ended May 31,

<TABLE>
<CAPTION>
                                                      AS RESTATED
                                                          1996          1995
                                                      -----------    -----------
<S>                                                   <C>             <C>
NET CASH PROVIDED BY OPERATING ACTIVITIES              $   556,000    $ 1,331,000

INVESTING ACTIVITIES

Purchase of property, plant and equipment                 (161,000)       (62,000)
Purchase of investment                                         ---       (157,000)
Increase in investments                                        ---         37,000
Cash received in Teltron acquisition                        22,000            ---
(Increase) decrease in other assets                          3,000        (13,000)
                                                       -----------    -----------
Net cash used in investing activities                     (136,000)      (195,000)

FINANCING ACTIVITIES

Proceeds from long-term debt and lines of credit         7,693,000      8,650,000
Proceeds on note receivable                                 45,000         30,000
Payments on long-term debt and lines of credit          (7,870,000)    (8,589,000)
Payments on note to shareholder                                ---       (291,000)
                                                       -----------    -----------
Net cash used in financing activities                     (132,000)      (200,000)

Effect of exchange rates on cash                           (92,000)       185,000
                                                       -----------    -----------

Net increase (decrease) in cash                            196,000      1,121,000

Cash, beginning of period                                1,057,000        104,000
                                                       -----------    -----------

Cash, end of period                                    $ 1,253,000    $ 1,225,000
                                                       ===========    ===========

RECONCILIATION OF NET EARNINGS FROM CONTINUING
  OPERATIONS TO NET CASH PROVIDED BY OPERATING
  ACTIVITIES
Net earnings from continuing operations                $   253,000    $   597,000

Adjustments to reconcile net earnings to net cash
 provided by operations:
Depreciation and amortization                              334,000        452,000
Amortized interest on note receivable                       (9,000)       (28,000)
Decrease in allowance for doubtful accounts                    ---         (3,000)

Changes in operating assets and liabilities net of
 effects from acquisitions:
(Increase) decrease in accounts receivable                 546,000        (79,000)
Increase in inventory                                     (957,000)      (830,000)
(Increase) decrease in prepaid expenses                    (59,000)           ---
Increase (decrease) in accounts payable and accrued
 expenses                                                  441,000      1,215,000

Increase in minority interest                                7,000          7,000
                                                       -----------    -----------

Net cash provided by (used in) continuing operations   $   556,000    $ 1,331,000
                                                       ===========    ===========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       7
<PAGE>
 
                  Video Display Corporation and Subsidiaries
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE A - RESTATEMENT OF PREVIOUS FILING

The May 31, 1996 results have been restated to reflect the reduction of gross
margin and related tax effect attibuted primarily to the consumer electronic
parts division.  The adjustment resulted in the reduction of the carrying value
of product inventories.

The following table identifies the affected accounts:

<TABLE>
<CAPTION>
                                 May 31, 1996
                                As Previously                     May 31, 1996
                                  Reported         Adjusted       As Restated
                                -------------     ----------      ------------
<S>                             <C>               <C>             <C>
Balance sheet
  Current assets                 $28,589,000      $  16,000       $28,605,000
  Total assets                   $36,499,000      $  16,000       $36,515,000
  Current liabilities            $17,023,000      $ 217,000       $17,240,000
  Shareholders'equity            $16,672,000      $(201,000)      $16,471,000
  Total liabilities and
    Shareholders' equity         $36,499,000      $  16,000       $36,515,000

<CAPTION>
                                Three Months Ended May 31, 1996
                                As Previously
                                  Reported         Adjusted       As Restated
                                -------------     ----------      ------------
<S>                             <C>               <C>             <C>
Income statement
  Net sales                      $12,098,000      $      --       $12,098,000
    Cost of goods sold             7,735,000        324,000         8,059,000
    Operating expenses             3,377,000             --         3,377,000
    Other income(expense)           (273,000)            --          (273,000)
    Income taxes                     254,000       (123,000)          131,000
    Net income                   $   454,000      $(201,000)      $   253,000
    Earnings per share           $      0.12      $   (0.05)      $      0.07
</TABLE>

                                       8

<PAGE>
 
                           VIDEO DISPLAY CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

Investments in 50% or less-owned affiliated companies are accounted for on the
equity method.

The balance sheet at February 29, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

In the opinion of management, the accompanying unaudited consolidated financial
statements reflect all adjustments "consisting of only normal accruals"
necessary to present fairly the Company's consolidated financial position as of
May 31, 1996 and the Consolidated Statement of Earnings for the three months
ended May 31, 1996 and 1995.


NOTE C - SETTLEMENT OF LITIGATION

The Company and Global Products, Inc. ("Global") entered into a settlement
agreement ("Settlement"), effective February 16, 1995 in which both parties
agreed to dismiss all litigation, claims and counter claims related to the
dispute between the two parties.  The settlement contained provisions whereby
certain assets, previously owned by Summit Organization, Ltd., Global and its
affiliates, were transferred to the Company.

In conjunction with the above settlement, the Company received an unsecured note
receivable with a face value of $1,500,000 due in monthly installments of
$15,000 over a term of 100 months.  The note is non-interest bearing for the
first 50 payments and interest bearing, at prime plus 1% over the remaining 50
payments.  As of May 31, 1996, the note is recorded at a total of $838,000, net
of its discount and allowance.


NOTE D - MARKETABLE EQUITY SECURITIES AND INVESTMENTS

The Company owns 266,000 shares of MicroTel International, Inc. (MOL), formerly
CXR, Inc., which it accounts for as an available-for-sale security.  As of May
31, 1996 and February 29, 1996, MOL had a market value of $1 3/8 and $1 3/4,
respectively.  In accordance with SFAS 115, the Company has reflected unrealized
gains and losses on the MicroTel shares as a separate component of shareholders'
equity.



                                       9
<PAGE>
                           VIDEO DISPLAY CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


Note E - LONG-TERM DEBT
 
Long-term debt consisted of the following:

<TABLE>
<CAPTION>
                                                   MAY 31,      February 29,
                                                    1996            1996
                                                 ----------     ------------
<S>                                              <C>            <C>
Term loan facility                               $2,600,000      $2,800,000

Note payable to bank; quarterly principal
payments of $10,000 plus interest at 86% of
prime (8.25% at May, 1996); collateralized by
land, building and equipment with a net book
value of $613,000 at May 31, 1996.                   69,000          69,000

Mortgage payable to bank; monthly principal
payments of $5,000 plus interest at prime plus
1%; balloon payment of outstanding principal
due October 1, 1996; collateralized by land
and building with a net book value of
$1,037,401 at May 31, 1996.                         254,000         269,000

Note payable to industrial development
authority; monthly payment of $4,000 including
interest at 6.5%; collateralized by land and
building with a net book value of $552,000 at       208,000         217,000
May 31, 1996.

Note payable to bank; monthly principal
payments of $24,000 including interest at 9%
collateralized by computer equipment with a
net book value of $481,000 at May 31, 1996.         106,000         154,000

Note payable to bank; montly payment of $8,000
plus interest at prime plus 1%; collateralized
by machinery and equipment with a net book
value of $398,000 at May 31, 1996.                   30,000          53,000

Note payable to bank; monthly payment of $2,000
plus interest at prime plus 1%; collateralized
by land and buildings with a net book value of
$183,000.                                           104,000         111,000

Other                                                35,000          48,000
                                                 ----------      ----------
                                                  3,406,000       3,721,000
Less current portion                              1,384,000       1,381,000
                                                 ----------      ----------
                                                 $2,022,000      $2,340,000
                                                 ==========      ==========
</TABLE>

                                      10
<PAGE>
 
                           Video Display Corporation
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

NOTE E - LONG-TERM DEBT (Continued)

On April 1, 1996, the Company acquired substantially all the assets and assumed
all the liabilities of Teltron Technologies, Inc. in exchange for a demand note
payable to an officer and shareholder of the Company in the amount of $900,000
with interest payable monthly at prime plus one percent and cash of $62,000.



                                      11
<PAGE>
 
                                 PART I


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


Results of Operations
---------------------

     The following table sets forth, for the three months ended May 31, 1996 and
1995, the percentages which selected items in the Statements of Income bear to
total revenues:



<TABLE>
<CAPTION>
                                                     Fiscal Quarter Ended May 31,
                                               AS RESTATED
                                                  1996                          1997
                                      -----------------------------  ---------------------------
 
Sales
<S>                                   <C>                <C>         <C>              <C>
CRT and components                         $ 5,773,000        47.7%     $ 5,831,000        48.8%
Wholesale electronic parts                   6,325,000        52.3        6,120,000        51.2
                                           -----------       -----      -----------       -----
                                           $12,098,000       100.0%     $11,951,000       100.0%
 
Cost and expenses
Cost of goods sold                         $ 8,059,000        66.6%     $ 7,462,000        62.4%
Selling and delivery                           941,000         7.8        1,152,000         9.6
General and administrative                   2,436,000        20.1        2,244,000        18.8
                                           -----------       -----      -----------
                                            11,436,000        94.5       10,858,000        90.8
 
Income from Operations                         662,000         5.5        1,093,000         9.2
 
Interest expense                              (283,000)       (2.3)        (292,000)       (2.4)
Other income (expense)                           5,000          --           11,000          --
                                           -----------       -----      -----------       -----
 
Income before income taxes                     384,000         3.2          812,000         6.8
Provision for income taxes                     131,000         1.1          215,000         1.8
                                           -----------       -----      -----------       -----
 
Net income                                 $   253,000         2.1%     $   597,000         5.0%
                                           ===========       =====      ===========       =====
</TABLE>

Net Sales
---------

     Consolidated net sales increased 1.2% or $147,000 for the three months
ended May 31, 1996 as compared to the same period one year ago.  CRT division
sales were down 1% or $58,000 and the wholesale consumer electronic parts
division sales were down 3% or $205,000.



                                      12
<PAGE>
 
MANAGEMENT'S DICUSSION AND ANALYSIS - (Continued)

     The net increase in sales of the wholesale electronic parts division is in
part attributed to the return of certain consumer product manufacturers to
standard distribution channels rather than selling direct.  This aspect accounts
for $536,000 of the increase.  An additional increase of $326,000 is attributed
to the fire safety equipment product line introduced in the first fiscal quarter
of 1995.  The offsetting declines of $689,000 reflect the growing trend of small
distribution companies and consumer shops being over powered by large discount
chains.

Gross Margins
-------------

     Consolidated gross profit margins as a percentage of sales declined from
37.6% for the quarter ended May 31, 1996 to 33.4% for the quarter ended May 31,
1996.  The CRT and wholesale electronic parts divisions posted declines of 2.3%
and 6.1% respectively.

     Decreases in the gross margin of the CRT division are attributed to two
factors:  an increase in the cost of certain television grade tubes and the mix
of tube categories sold (i.e. lower margin monochrome tubes vs. higher margin
color tubes).

     Decreases in the gross margin of wholesale electronic parts are attributed
primarily to the effect of reduced margins realized on the increased sales to
major electronic distributors compared to sales generated from retail and other
end users.  Fire and safety sales are also at lower margins than other retail
accounts.
 
Operating Expenses
------------------

     Selling and general and administrative expenses declined by $19,000 or .6%
over a year ago.  The Company continues to reduce its operating expenses in
response to lower sales.

Interest Expense
----------------

     Interest expense decreased $9,000 to $283,000 in the first quarter of 1997.
The Company derived a net $5,000 benefit from interest rate swap agreements with
a bank that fixed the interest rate on $7,500,000 of outstanding borrowings
adjusted upward for the excess of prime over 8%, if any.  These agreements
expired during May 1996.

Income Taxes
------------

     The Company's effective tax rate for the first quarter of fiscal 1997 was
34.1% as compared to 26.5% for the same period a year ago.  The difference in
the effective tax rate is attributable to the decrease in earnings in the first
quarter of fiscal 1997 of our foreign subsidiary.  The foreign subsidiary has a
tax loss carry forward which is applicable to these earnings.
 

                                      13
<PAGE>
 
Foreign Currencies
------------------

     The Company recorded a $39,000 increase to shareholders' equity in the
first quarter of fiscal 1997 related primarily to the Company's Mexican facility
and the effects on its financial statements calculated using the Mexican pesco
as its functional currency.  The peso rebounded slightly in the first quarter
accounting for the gain reported.

Liquidity and Capital Resources
--------------------------------

     The Company's working capital was $11,365,000 at May 31, 1996 as compared
to $11,996,000 at February 29, 1996.

     Net cash provided by operating activities for the three months ended May
31, 1996 was $556,000 on net income of $454,000.

     Capital expenditures for fiscal 1997 are not anticipated to be significant
other than the leasehold improvements and moving costs associated with the
relocation of the Arizona electron gun facility to Stone Mountain, Georgia.
Those costs are estimated to be $250,000.

     In fiscal 1995, the Company entered into a new loan agreement with the bank
providing a $4,000,000 five year term loan and a one year $10,000,000 revolving
line of credit.  The revolver has been renewed through August 31, 1996 and the
Company will be required to seek renewal of this facility in fiscal 1997.  The
Company does not anticipate problems in the renegotiation of the debt.

     In April 1996, the Company exercised its option to purchase substantially
all the assets and assume the liabilities of Teltron Technologies, Inc. ("TTI")
for a purchase price of $963,000 consisting of cash of $63,000 and a demand note
payable of $900,000.

     Subsequent to May, the Company acquired 100% of the stock of Z-Axis, Inc.
The Company issued $2,000,000 in face value of an 8% convertible subordinated
debenture in payment for the acquistion. The debenture has a 5-year maturity
date with a conversion rate based on the quoted fair market value of the
Company's stock on the date the conversion is elected. An additional amount of
debentures may be due based upon a performance contingency formula during the
years of February 28, 1997, 1998 and 1999 inclusive. Z-Axis, Inc., founded in
1989 with strong support of the Company's management, manufactures and markets
specialty monochrome and color CRT monitor assemblies.

     The Company is currently bidding on sales contracts for additional revenues
which could significantly increase its requirements for working capital.  It is
the Company's intent to finance its short term capital requirements through its
existing bank borrowing relationships; however, longer term sources of more
permanent capital may be required if certain larger contracts are awarded to the
Company.

                                      14
<PAGE>
 
                                    PART II


Item 1.  Legal Proceedings

         No new legal proceedings or material changes in existing
   litigation occurred during the quarter ending May 31, 1996.
 

Item 2.  Changes in Securities

         None.


Item 3.  Defaults upon Senior Securities

         None.


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

         None.


Item 5.  Other Information

         None.


Item 6.  Exhibits and Reports on Form 8-K


         The Company did not file any reports on Form 8-K during the three
   months ended May 31, 1996.


                                      15
<PAGE>
 
                                 SIGNATURES


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


                                VIDEO DISPLAY CORPORATION



July 3, 1996                 By:  /s/ Ronald D. Ordway
                                  ------------------------------
                                  Ronald D. Ordway
                                  Chief Executive Officer



                             By:  /s/ Carol D. Franklin
                                  ------------------------------
                                  Carol D. Franklin
                                  Secretary and Controller