COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

9 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

NOTE 4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Inventory

Inventory is stated at the lower of cost (first-in, first-out) or net realizable value and consists of the following (in thousands):

	March 31, 2024		June 30, 2023
Raw materials /purchased components	$	6,383	$	8,824
Work in process		3,944		3,686
Sub-assemblies/finished components		2,379		2,387
Finished goods		1,536		1,270
Total inventory	$	14,242	$	16,167

Investments

Investments are stated at market value and consist of the following (in thousands):

	March 31, 2024		June 30, 2023
Current:
Marketable equity securities – short-term	$	4,577	$	1,134
Long-term:
Warrant		—		6,160
Marketable equity securities – long-term		1,543		1,361
Total Investments	$	6,120	$	8,655

Investments at March 31, 2024 and June 30, 2023 had an aggregate cost basis of $3,964,000 and $2,714,000, respectively. The long-term investments include equity investments of thinly traded securities that we classified as long term in nature because if we decide to sell these securities, we may not be able to sell our position within one year. At March 31, 2024, the investments included net unrealized gains of $2.2 million (gross unrealized gains of $2.4 million offset by gross unrealized losses of $253,000). At June 30, 2023, the investments, excluding the Monogram Warrant, included net unrealized losses of $219,000 (gross unrealized losses of $286,000 offset by gross unrealized gains of $67,000).

Of the total marketable equity securities at March 31, 2024 and June 30, 2023, $1.0 million and $1.1 million, respectively, represent an investment in the common stock of Air T, Inc. Two of our Board members are also board members of Air T, Inc. and both either individually or through affiliates own an equity interest in Air T, Inc. Our Chairman, one of the two Board members aforementioned, also serves as the Chief Executive Officer and Chairman of Air T, Inc. Another of our Board members is employed by Air T, Inc. as its Chief of Staff. The shares were purchased through 10b5-1 Plans, that, in accordance with our internal policies regarding the approval of related-party transactions, were approved by our then three Board members that are not affiliated with Air T, Inc.

On October 6, 2023, in conjunction with the execution of a supply agreement with Monogram, we exercised the Monogram Warrant in full in cash totaling $1,250,000 and received 1,828,551 shares of Monogram common stock (NasdaqCM: MGRM). On the date of exercise our unrealized loss on the investment was approximately $38,000. The fair value of the Monogram common stock is reflected in marketable equity securities – short term in the table above as of March 31, 2024. Our Chief Executive Officer, Richard Van Kirk (“Rick”), is also a Monogram board member.

We invest surplus cash from time to time through our Investment Committee, which is comprised of one management director, Rick, and two non-management directors, Raymond Cabillot (“Ray”) and Nicholas Swenson (“Nick”), who chairs the committee. Both Nick and Ray are active investors with extensive portfolio management expertise. We leverage the experience of these committee members to make investment decisions for our surplus operating capital or borrowed funds. Additionally, many of our securities holdings include stocks of public companies that Nick or Ray (or both) may own from time to time either individually or through the investment funds they manage, or other companies whose boards they sit on, such as Air T, Inc.

Land and building

Land and building consist of the following (in thousands):

	March 31, 2024			June 30, 2023
Land	$	3,684		$	3,684
Building		2,815			2,815
Total		6,499			6,499
Less: accumulated depreciation		(320	)		(250	)
	$	6,179		$	6,249

On November 6, 2020, we acquired the Franklin Property for a total purchase price of $6.5 million, of which we paid $1.3 million in cash and the balance of $5.2 we financed through Minnesota Bank & Trust (“MBT”) (See Note 10). We substantially completed the build-out of the property in the first quarter of fiscal 2022. We began operations in the new facility during the fourth quarter of fiscal 2023. For the three months ended March 31, 2024 and 2023 we recorded $23,000 of depreciation expense and for the nine months ended March 31, 2024 and 2023 we recorded $70,000 of depreciation expense. The building is being amortized on a straight-line basis over a period of 30 years.

Intangibles

Intangibles consist of the following (in thousands):

	March 31, 2024			June 30, 2023
Patent-related costs	$	208		$	208
Less accumulated amortization		(147	)		(127	)
	$	61		$	81

Patent-related costs consist of legal fees incurred in connection with both patent applications and a patent issuance and will be amortized over the estimated life of the product(s) that is or will be utilizing the technology or expensed immediately in the event the patent office denies the issuance of the patent. For the three months ended March 31, 2024, and 2023 we recorded $7,000 and $10,000 of amortization expense, respectively, and for the nine months ended March 31, 2024 and 2023 we recorded $21,000 and $31,000 of depreciation expense, respectively. Future amortization expense is expected to be $7,000 for the remainder of fiscal 2024 and $28,000 per fiscal year through fiscal 2026, at which time we expect these costs to be fully amortized.