Investment Securities and Fair Value of Financial Instruments

3 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment Securities and Fair Value of Financial Instruments

Note 2. Investment Securities and Fair Value of Financial Instruments

ASC 820 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 standard describes three levels of inputs that may be used to measure fair value:

§ Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

§ Level 2: Significant other 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.

§ Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The carrying amounts of financial instruments, including cash and cash equivalents, short term investment securities, accounts receivable, accounts payable and accrued expenses, approximated fair value as of September 30, 2016 and June 30, 2016 because of the immediate or short-term maturity of these financial instruments.

Investment securities at September 30, 2016 and June 30, 2016 consist of certificates of deposit and municipal bonds which are classified as available-for-sale securities and have been determined to be level 1 assets. The cost, gross unrealized gains, gross unrealized losses and fair value of available-for-sale securities by major security type at September 30, 2016 and June 30, 2016 are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
September 30, 2016
Certificates of deposit	$	8,281,000	$	—	$	—		$	8,281,000
Municipal bonds		432,298		662		(251	)		432,709
Total investment securities	$	8,713,298	$	662	$	(251	)	$	8,713,709
June 30, 2016
Certificates of deposit	$	4,871,000	$	—	$	—		$	4,871,000
Municipal bonds		707,593		1,466		—			709,059
Total investment securities	$	5,578,593	$	1,466	$	—		$	5,580,059

The portfolio is diversified and highly liquid and primarily consists of investment grade fixed income instruments. At September 30, 2016, the Company did not have any investments in individual securities that have been in a continuous loss position considered to be other than temporary.

As of September 30, 2016 and June 30, 2016, the contractual maturities of available-for-sale securities were as follows:

	Years to Maturity
	Less than		One to
	One Year		Five Years		Total
September 30, 2016
Available-for-sale	$	8,435,775	$	277,934	$	8,713,709
June 30, 2016
Available-for-sale	$	4,811,511	$	768,548	$	5,580,059