3. BALANCE SHEET COMPONENTS

Inventories

Inventories as of August 31, 2016 and 2015 consist of the following (in thousands):


	August 31,
	2016		2015
Raw materials	$	1,400	$	1,857
Work in process		700		793
Finished goods		1,967		3,274
Total	$	4,067	$	5,924

Inventory write‑downs to estimated net realizable values for the years ended August 31, 2016 and 2015 were $1,542 thousand and $1,400 thousand, respectively.

Property, Plant and Equipment

Property, plant and equipment as of August 31, 2016 and 2015 consist of the following (in thousands):


	August 31,
	2016		2015
Buildings and improvements	$	12,822	$	13,833
Machinery and equipment		41,065		43,661
Leasehold improvements		213		474
Other equipment		2,198		3,683
Construction in progress		812		1,418
Total property, plant and equipment		57,110		63,069
Less: Accumulated depreciation and amortization		(48,297)		(42,290)
Property, plant and equipment, net	$	8,813	$	20,779

Depreciation expense was $5,288 thousand and $4,752 thousand for the years ended August 31, 2016 and 2015, respectively.

The Company experienced a decline in revenues and negative gross margins during the year ended August 31, 2016, primarily due to longer than anticipated time for the transition toward the fabless business model, a continued slowdown in demand for the Company's LED products and pricing pressure from intense competition within the LED industry. During the fourth quarter of fiscal 2016, the ODM partner, which just recovered from a serious catastrophic event, expressed its interest on acquiring a portion of the equity of one of the Company’s subsidiaries. Although the discussion is in a preliminary stage, the management believes the evaluation will take time and may further delay the transition schedule, which caused the Company to update long-term financial forecasts, which reflected lower estimated near-term and longer-term revenues and profitability compared to estimates developed from prior years. The Company's market capitalization had also fallen below its consolidated net book value based on the quoted market price of common stock for a sustained period of time. Based on these potential impairment indicators, management evaluated the recoverability of the Company's long-lived assets for impairment in fiscal 2016. The carrying amount of the Company's asset group associated with the manufacture and sale of LED chips and LED components exceeded the expected future net undiscounted cash flows to be generated from this asset group. The Company determined that the fair value of the asset group exceeded its carrying value by $8,635 thousand. The fair value of the asset group was determined, with the assistance of a third party independent valuation, based on the present value of expected future net cash flows discounted at the weighted average cost of capital of 13.4%. The resulting impairment charge that was allocated to the property, plant and equipment of the asset group was $7,433 thousand for the year ended August 31, 2016.

Property, plant and equipment pledged as collateral for the Company’s notes payable were $4.7 million and $7.1 million as of August 31, 2016 and 2015, respectively.

Intangible Assets

Intangible assets as of August 31, 2016 and 2015 consist of the following (in thousands):


	August 31, 2016
	Weighted
	Average	Gross				Net
	Amortization	Carrying		Accumulated		Carrying
	Period (Years)	Amount		Amortization		Amount
Patents and trademarks	15	$	487	$	443	$	44
Acquired technology	5		479		479		—
Total		$	966	$	922	$	44


	August 31, 2015
	Weighted
	Average	Gross				Net
	Amortization	Carrying		Accumulated		Carrying
	Period (Years)	Amount		Amortization		Amount
Patents and trademarks	14	$	1,390	$	333	$	1,057
Acquired technology	5		662		366		296
Total		$	2,052	$	699	$	1,353

Amortization expense was $238 thousand and $217 thousand for the years ended August 31, 2016 and 2015, respectively.

In the fourth quarter of fiscal 2016, in conjunction with the asset group impairment test discussed further above, management determined the intangible assets of the Company's associated with the manufacture and sale of LED chips and LED components, which consists primarily of patents, trademarks and acquired technology are part of that asset group. The asset group impairment was also allocated to these intangible assets and consequently the Company recognized an impairment charge of $1,202 thousand during the year ended August 31, 2016 on these intangible assets. No impairment charge was recognized in the year ended August 31, 2015.

The estimated future amortization expense for the Company’s intangible assets as of August 31, 2016 is as follows (in thousands):


Years Ending August 31,	Total
2017	$	4
2018		4
2019		4
2020		4
2021		4
Thereafter		24
Total	$	44

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities as of August 31, 2016 and 2015 consist of the following (in thousands):


	August 31,
	2016		2015
Accrued compensation and benefits	$	1,283	$	1,505
Accrued professional service fees		319		387
Accrued business expenses		300		319
Advance receipts		250		256
Customer deposits		245		239
Other (individually less than 5% of total accrued expenses and other current liabilities)		364		891
Total	$	2,761	$	3,597