COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

12 Months Ended

Jun. 30, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

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 COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Investments

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

	June 30, 2019		June 30, 2018
Marketable equity securities – short-term	$	2,649	$	2,220
Marketable equity securities – long-term		582		—
Total Marketable equity securities	$	3,231	$	2,220

Investments at June 30, 2019 and 2018 had an aggregate cost basis of $3,780,000 and $2,373,000, respectively. The long-term investments include an equity security purchased during the third quarter of fiscal 2019 that is thinly traded and therefore we classified the asset as long term in nature because even if we decide to sell the stock we may not be able to sell our position within one year. At June 30, 2019, the investments included gross unrealized losses of $549,000 and no unrealized gains. 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 short-term marketable equity securities at June 30, 2019 and 2018, $938,000 and $285,000, respectively, represent an investment in the common and preferred 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.

We invest surplus cash from time to time through our Investment Committee, which is comprised of one management director, Mr. Van Kirk, and two non-management directors, Mr. Cabillot and Mr. Swenson, who chairs the committee.  Both Mr. Cabillot and Mr. Swenson are active investors with extensive portfolio management expertise.  We leverage the experience of these committee members to make investment decisions for the investment of our surplus operating capital or borrowed funds.  Additionally, many of our securities holdings include stocks of public companies that either Messrs. Swenson or Cabillot or both may own from time to time either individually or through the investment funds that they manage, or other companies whose boards they sit on, such as 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,
	2019		2018
Raw materials /purchased components	$	3,132	$	1,878
Work in process		1,511		974
Sub-assemblies /finished components		1,524		1,193
Finished goods		72		348
Total inventory	$	6,239	$	4,393

Equipment and Leasehold Improvements

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

	June 30,
	2019			2018
Office furnishings and fixtures	$	2,067		$	1,821
Machinery and equipment		5,119			4,488
Automobiles		21			—
Leasehold improvements		2,276			2,170
Total		9,483			8,479
Less: Accumulated depreciation and amortization		(6,757	)		(6,724	)
	$	2,726		$	1,755

Depreciation expense for the years ended June 30, 2019 and 2018 amounted to $416,000 and $522,000, respectively.  During fiscal 2019, fully depreciated assets in the amount of $103,000 were retired and an additional $280,000 of fully depreciated assets were sold. 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.

Intangibles

Intangibles consist of the following (in thousands):

	June 30, 2019			June 30, 2018
Covenant not to compete	$	—		$	30
Patent-related costs		175			164
Total intangibles		175			194
Less accumulated amortization		(46	)		(54	)
	$	129		$	140

Amortization expense for the years ended June 30, 2019 and 2018 amounted to $22,000 and $20,000, respectively.

The covenant not to compete related to assets acquired in conjunction with a business acquisition. The covenant not to compete and related accumulated amortization were retired during the second quarter of fiscal 2019.  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,
	2019		2018
Payroll and related items	$	480	$	438
Accrued inventory in transit		276		301
Accrued legal and professional fees		130		155
Accrued bonuses		221		109
Warranty		136		107
Accrued losses on development contracts		83		83
Accrued sales, use and excise taxes		2		6
Other		109		67
	$	1,437	$	1,266