COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

12 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

3.        COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

Investments

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

	June 30, 2020		June 30, 2019
Marketable equity securities – short-term	$	2,560	$	1,711
Marketable equity securities – long-term		2,360		1,520
Total Marketable equity securities	$	4,920	$	3,231

Investments at June 30, 2020 and 2019, had an aggregate cost basis of $6,483,000 and $3,780,000, respectively. The long-term investments include equity securities of public companies that are thinly traded and therefore we classified the assets as long term in nature because even if we decide to sell the stocks we may not be able to sell our position within one year. At June 30, 2020, the investments included net unrealized losses of $1,563,000 (gross unrealized losses of $1,703,000 offset by gross unrealized gains of 140,000). At June 30, 2019, the investments included gross unrealized losses of $549,000 and no unrealized gains.

Of the total long-term marketable equity securities at June 30, 2020 and 2019, $847,000 and $938,000, respectively, represent an investment in the common and preferred stock of Air T, Inc. Two of our Board members Messrs. Swenson and Cabillot, are also Board members of Air T, Inc. and both either individually or through affiliates own an equity interest in Air T, Inc. Mr. Swenson, our Chairman, 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,
	2020		2019
Raw materials /purchased components	$	4,241	$	3,132
Work in process		2,339		1,511
Sub-assemblies /finished components		1,438		1,524
Finished goods		220		72
Total inventory	$	8,238	$	6,239

Equipment and Leasehold Improvements

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

	June 30,
	2020			2019
Office furnishings and fixtures	$	2,143		$	2,067
Machinery and equipment		5,382			5,119
Automobiles		21			21
Leasehold improvements		2,359			2,276
Total		9,905			9,483
Less: accumulated depreciation and amortization		(7,219	)		(6,757	)
	$	2,686		$	2,726

Depreciation expense for the years ended June 30, 2020 and 2019, amounted to $559,000 and $416,000, respectively. During fiscal 2020, fully depreciated assets in the amount of $58,000 were retired and an additional $39,000 of fully depreciated assets were sold. 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.

Intangibles

Intangibles consist of the following (in thousands):

	June 30, 2020			June 30, 2019
Patent-related costs	$	222		$	175
Less accumulated amortization		(60	)		(46	)
	$	162		$	129

Amortization expense for the years ended June 30, 2020 and 2019, amounted to $14,000 and $22,000, respectively.

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,
	2020		2019
Payroll and related items	$	689	$	480
Accrued inventory in transit		303		276
Accrued legal and professional fees		141		130
Accrued bonuses		570		221
Current portion of lease liability		339		—
Warranty		213		136
Accrued losses on development contracts		—		83
Accrued sales, use and excise taxes		7		2
Other		149		109
	$	2,411	$	1,437