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COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS

6 Months Ended

Dec. 31, 2018

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, 2018		June 30, 2018
Raw materials /purchased components	$	1,824	$	1,878
Work in process		1,461		974
Sub-assemblies /finished components		1,185		1,193
Finished goods		70		348
Total inventory	$	4,540	$	4,393

Investments

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

December 31,

2018

June 30,

2018

Marketable equity securities

1,842

2,220

Investments at December 31, 2018 and June 30, 2018 had an aggregate cost basis of $2,190,000 and $2,374,000, respectively. At December 31, 2018, the investments included net unrealized losses of $349,000 (gross unrealized losses of $421,000 offset by gross unrealized gains of $72,000). During the quarter ended December 31, 2018 we incurred unrealized losses of $548,000 and related tax benefit of $54,000 recorded in other comprehensive income. Additionally, during the quarter ended December 31, 2018, we liquidated one of our investments and recorded a realized gain in the amount of $356,000. During the six months ended December 31, 2018, we recorded unrealized losses of $196,000. 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 December 31, 2018 and June 30, 2018, $809,000 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.

Intangibles

Intangibles consist of the following (in thousands):


	December 31, 2018			June 30, 2018
Covenant not to compete	$	—		$	30
Patent-related costs		178			164
Total intangibles	$	178		$	194
Less accumulated amortization		(39	)		(54	)
	$	139		$	140

The covenant not to compete relates 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.