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FAIR VALUE MEASUREMENTS

9 Months Ended

Mar. 31, 2025

NOTE 4. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the use of various valuation methodologies, including market, income, and cost approaches is permissible. We consider the principal or most advantageous market in which it would transact and assumptions that market participants would use when pricing the asset or liability.

Fair Value Hierarchy. The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value based on the reliability of inputs. A financial instrument’s categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. Our assessment of a particular input to the fair value measurement requires judgment and may affect their placement within the fair value hierarchy levels.

We have categorized our cash equivalents and investments within the fair value hierarchy as follows:

Level 1 – applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. These Level 1 assets include our money market accounts, which are classified as cash equivalents. We have categorized our cash equivalents as Level 1 assets as there are quoted prices in active markets for identical assets or liabilities.

Level 2 – applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by observable market data. At March 31, 2025 and June 30, 2024, we have categorized our investments in marketable equity securities as Level 2 assets.

Level 3 – applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. We held no Level 3 assets or liabilities at March 31, 2025 or June 30, 2024.


	Fair Value Measurement at March 31, 2025
	Level 1		Level 2		Level 3		Level 4

Financial Assets:
Cash equivalents	$	33	$	—	$	—	$	33
Marketable equity securities – short-term		—		5,417		—		5,417
Marketable equity securities – long-term		—		111		—		111
Total	$	33	$	5,528	$	—	$	5,561


	Fair Value Measurement at June 30, 2024
	Level 1		Level 2		Level 3		Level 4

Financial Assets:
Cash equivalents	$	45	$	—	$	—	$	45
Marketable equity securities – short-term		—		4,217		—		4,217
Marketable equity securities – long-term		—		1,563		—		1,563
Total	$	45	$	5,780	$	—	$	5,825

Investments in marketable equity securities at March 31, 2025 and June 30, 2024 had an aggregate cost basis of $2,651,000 and $3,964,000, 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. During the quarter ended March 31, 2025, we sold one of our marketable equity securities previously reported in long term investments for $1.9 million in cash and recorded a realized gain in the amount of $595,000. At March 31, 2025, the investments included net unrealized gains of $2.9 million (gross unrealized gains of $3.4 million offset by gross unrealized losses of $493,000). At June 30, 2024, the investments included net unrealized gains of $1.8 million (gross unrealized gains of $2.1 million offset by gross unrealized gains of $261,000).

Of the total marketable equity securities at March 31, 2025 and June 30, 2024, $797,000 and $987,000, 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 Technologies, Inc., formerly Monogram Orthopaedics Inc. (“Monogram”), we exercised a warrant to purchase common stock of Monogram (the “Monogram Warrant”) in full in cash totaling $1,250,000 and received 1,828,551 shares of Monogram common stock (NasdaqCM: MGRM). The fair value of the Monogram common stock is reflected in marketable equity securities – short term in the tables above. 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 Van Kirk, and two non-management directors, Raymond Cabillot and Nicholas Swenson, who chairs the committee. Both Messrs. Cabillot and Swenson 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 either Messrs. Cabillot or Swenson 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.