COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

3 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

NOTE 3. COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Investments

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

	September 30, 2018		June 30, 2018
Marketable equity securities	$	3,398	$	2,220

Investments at September 30, 2018 and June 30, 2018 had an aggregate cost basis of $3,198,000 and $2,374,000 respectively. During the quarter ended September 30, 2018, the investments incurred unrealized gains of $353,000 (gross unrealized gains of $403,000 offset by gross unrealized losses of $50,000) and related income tax expense of approximately $55,000 recorded in other comprehensive income. At June 30, 2018, the investments included net unrealized losses of $153,000 (gross unrealized losses of $196,000 offset by gross unrealized gains of $43,000).

Of the total marketable equity securities at September 30, 2018 and June 30, 2018, $1,113,000 and $285,000, 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):

	September 30, 2018		June 30, 2018
Raw materials /purchased components	$	1,942	$	1,878
Work in process		1,387		974
Sub-assemblies /finished components		1,125		1,193
Finished goods		111		348
Total inventory	$	4,565	$	4,393

Intangibles

Intangibles consist of the following (in thousands):

	September 30, 2018			June 30, 2018
Covenant not to compete	$	30		$	30
Patent-related costs		163			164
Total intangibles	$	193		$	194
Less accumulated amortization		(59	)		(54	)
	$	134		$	140

The covenant not to compete relates to assets acquired in conjunction with a 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.