Supplementary Balance Sheet Information

9 Months Ended

Sep. 30, 2020

The components of inventories are as follows (in thousands):


	September 30, 2020		December 31, 2019
Raw materials	$	5,255	$	4,309
Work-in-process	2,884		2,710
Finished goods	1,206		461
Total inventories	9,345		7,480
Less reserve for excess and obsolete inventories	(345)		(383)
Total inventories, net	$	9,000	$	7,097

Property and equipment consist of the following (in thousands):


	September 30, 2020		December 31, 2019
Land	$	995	$	995
Buildings and leasehold improvements	5,452		5,451
Machinery and equipment	57,316		57,417
Total property and equipment	63,763		63,863
Less accumulated depreciation	(45,634)		(41,725)
Total property and equipment, net	$	18,129	$	22,138

In April 2019, Digirad purchased three manufacturing facilities, including land, in Maine that manufacture modular buildings (two of which were purchased from KBS Builders, Inc., a wholly-owned subsidiary of ATRM (“KBS”)) for $5.2 million and leased those three properties to KBS. KBS subleased the manufacturing building located in Waterford, Maine to North Country Steel Inc., a Maine corporation with an initial 5 year term rental agreement, commenced on September 6, 2019. The rental agreement is structured with a monthly payment arrangement and is accounted for as operating lease. Refer to lease income discussed in Note 2, Revenue.

During the three months ended September 30, 2020, as a result of continued operating losses and cash flow deficiencies, the Company identified a triggering event requiring a test for the recoverability of long-lived assets held and used at the asset group level. Assessing the recoverability of long-lived assets held and used requires significant judgments and estimates by management.

For purposes of testing long-lived assets for recoverability, the Company operates as five separate asset groups: Diagnostic Services, Diagnostic Imaging, Mobile Healthcare, Building and Construction, and Real Estate and Investment Management. In assessing the recoverability of long-lived assets held and used, the Company determined the carrying amount of long-lived assets held and used to be in excess of the estimated future undiscounted net cash flows of the related assets. The Company proceeded to determine the fair value of its long-lived assets held and used, principally through use of the market approach. The Company’s use of the market approach included consideration of market transactions for comparable assets. Management concluded that the fair value of long-lived assets held and used exceeded their carrying value, and as such, no impairment loss was recorded.

A significant decrease in the market price of a long-lived asset, adverse change in the use or condition of a long-lived asset, adverse change in the business climate or legal or regulatory factors impacting a long-lived asset and continued operating losses and cash flow deficiencies associated with a long-lived asset, among other indicators, could cause a future assessment to be performed which may result in an impairment of long-lived assets held and used, resulting in a material adverse effect on the financial position and results of operations of the Company.