COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

6 Months Ended

Dec. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

NOTE 3. 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):

	December 31, 2019		June 30, 2019
Raw materials /purchased components	$	3,649	$	3,132
Work in process		2,394		1,511
Sub-assemblies/finished components		1,586		1,524
Finished goods		179		72
Total inventory	$	7,808	$	6,239

Investments

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

	December 31, 2019		June 30, 2019
Marketable equity securities - short-term	$	3,540	$	2,649
Marketable equity securities - long-term		1,610		582
Total marketable equity securities	$	5,150	$	3,231

Investments at December 31, 2019 and June 30, 2019 had an aggregate cost basis of $5,050,000 and $3,780,000, respectively. At December 31, 2019, the investments included net unrealized gains of $100,000 (gross unrealized gains of $329,000 offset by gross unrealized losses of $229,000). During the quarter ended December 31, 2019, we incurred net unrealized gains of $705,000. At June 30, 2019, the investments included net unrealized losses of $549,000 and no unrealized gains.

Of the total marketable equity securities at December 31, 2019 and June 30, 2019, $1,410,000 and $938,000, 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 common stock was purchased through 10b5-1 Plans, and the purchased preferred stock was purchased through the exercise of issued warrants and in both cases, in accordance with our internal policies regarding the approval of related party transactions, purchases were 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.

Intangibles

Intangibles consist of the following (in thousands):

	December 31, 2019			June 30, 2019
Patent-related costs	$	198		$	175
Less accumulated amortization		(53	)		(46	)
	$	145		$	129

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.