COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

12 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

5. 

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Investments

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

	June 30,
	2018		2017
Marketable equity securities	$	2,220	$	718

At June 30, 2018, our investments had an aggregate cost basis of $2,373,000 and net unrealized losses of $153,000 (gross unrealized losses of $196,000 offset by gross unrealized gains of $43,000).

At June 30, 2017, our investments had an aggregate cost basis of $663,000 and net unrealized gains of $55,000 (gross unrealized gains of $57,000 offset by gross unrealized losses of $2,000) and related tax expense of approximately $22,000 recorded in other comprehensive income.

Of the total marketable equity securities at June 30, 2018 and 2017, $285,000 and $65,000, 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. The shares have been purchased through 10b5-1 Plans, which in accordance with our internal policies regarding the approval of related party transactions, was approved by our three Board members that are not affiliated with Air T, Inc.

Inventory

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

	June 30,
	2018		2017
Raw materials /purchased components	$	1,878	$	1,127
Work in process		974		746
Sub-assemblies /finished components		1,193		1,018
Finished goods		348		193
Total inventory	$	4,393	$	3,084

Equipment and Leasehold Improvements

Equipment and leasehold improvements consist of the following (in thousands):

	June 30,
	2018			2017
Office furnishings and fixtures	$	1,821		$	1,808
Machinery and equipment		4,488			5,140
Leasehold improvements		2,170			2,119
Total		8,479			9,067
Less: Accumulated depreciation and amortization		(6,724	)		(7,717	)
	$	1,755		$	1,350

Depreciation expense for the years ended June 30, 2018 and 2017 amounted to $522,000 and $505,000, respectively. During fiscal 2018, assets in the amount of approximately $1.2 million were retired and an additional $359,000 of fully depreciated assets were sold. In conjunction with the sale of the Fineline division during fiscal 2018, assets with a cost basis of $160,000 and accumulated amortization totaling $81,000 have been eliminated from the June 30, 2017 balances above, consistent with the assets held for sale presentation previously described.

Intangibles

Intangibles consist of the following (in thousands):

	June 30,
	2018			2017
Covenant not to compete	$	30		$	30
Patent-related costs		164			153
Total intangibles		194			183
Less accumulated amortization		(54	)		(34	)
	$	140		$	149

Amortization expense for both years ended June 30, 2018 and 2017 amounted to $20,000.

The covenant not to compete relates to assets acquired in conjunction with the Huber business acquisition. 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. Since we do not know when, or if, our patent applications will be issued, the future amortization expense is not predictable.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,
	2018		2017
Payroll and related items	$	438	$	417
Accrued inventory in transit		301		52
Accrued legal and professional fees		155		151
Accrued bonuses		109		390
Warranty		107		159
Accrued losses on development contracts		83		—
Accrued sales, use and excise taxes		6		9
Deferred rent		—		68
Other		67		98
	$	1,266	$	1,344