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COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS | 12 Months Ended
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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 |

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