XML 25 R11.htm IDEA: XBRL DOCUMENT
v3.23.3

COMPOSITION OF CERTAIN FINANCIAL STATEMENT ITEMS | 12 Months Ended
--- | ---
Jun. 30, 2023
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):
Schedule of investments |  |  |  |  |  |  |  |
|  | Years Ended June 30, |
|  | 2023 |  |  | 2022 |
Current: |  |  |  |  | (Restated) |
Marketable equity securities – short-term |  | $ | 1,134 |  |  | $ | 755 |
Long-term: |  |  |  |  |  |  |  |
Warrant |  |  | 6,160 |  |  |  | 2,304 |
Marketable equity securities – long-term |  |  | 1,361 |  |  |  | 1,779 |
Total Investments |  | $ | 8,655 |  |  | $ | 4,838 |
Marketable equity securities at June 30, 2023 and 2022 had an aggregate cost basis of $2,714,000 and $2,796,000, respectively. Both current and long-term marketable equity securities include equity securities of public companies that are thinly traded. We classified certain investments 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, 2023, the investments included net unrealized losses of $219,000 (gross unrealized losses of $286,000 offset by gross unrealized gains of $67,000). At June 30, 2022, the investments included net unrealized losses of $262,000 (gross unrealized losses of $369,000 offset by gross unrealized gains of $107,000). Of the total marketable equity securities at June 30, 2023 and 2022, $1,134,000 and $755,000, respectively, represent an investment in the common 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. Another of our Board members is employed by Air T as its Chief of Staff. The shares have been purchased through 10b5-1 Plans that, in accordance with our internal policies regarding the approval of related-party transactions, were approved by our then three Board members that are not affiliated with Air T, Inc. The warrant represents our right to purchase up to 5% of the outstanding stock of Monogram Orthopaedics Inc. (“Monogram”) which we were granted on December 18, 2018. By way of background, we invested in Monogram, a medical device start-up specializing in precision, patient specific implants in fiscal 2017, by making an $800,000 loan to Monogram pursuant to a promissory note in the same amount. At that time, our Chief Executive Officer, Mr. Van Kirk, was appointed to Monogram’s board of directors, a position he has held through the date of this filing. We impaired our entire $800,000 investment in the fourth quarter of fiscal 2018 due to indications that Monogram had exhausted its cash and had been unable to obtain additional financing to enable continued research to commercialize their technology. In fiscal 2019, we modified the promissory note to allow Monogram more time to re-pay the note and, concurrently, we were issued the warrant, with an exercise price of $1,250,000, which at the time we deemed of de minimis value. During the fourth quarter of fiscal 2020, Monogram repaid the promissory note with interest, but at that time and through the end of the third quarter of fiscal 2023, we considered the warrant to be of little value and therefore did not record it as an investment on our consolidated balance sheet. In May of 2023, Monogram raised funds through a Regulation A+ offering filed with the Securities and Exchange Commission and contemporaneously converted all of its outstanding preferred stock to common shares and publicly listed its common shares on the NASDAQ under the ticker symbol MGRM. The valuation of the warrant for all prior periods is the subject of the restatement of our previous financial statements because the value of $0 we had ascribed to the Monogram Warrant in previous periods want not based on its estimated fair value (See Note 2). At June 30, 2023 and 2022, the warrant was exercisable into a total of 1,823,058 and 783,386 shares of Monogram’s outstanding stock. The estimated fair value of the warrant at June 30, 2023 and 2022 was $6,160,000 and $2,304,000, respectively, using a Black-Scholes valuation model with the following assumptions:
Schedule of assumptions used |  |  |  |  |  |
|  | June 30, 2023 |  |  | June 30, 2022 |
Stock Price (common) |  | $ | 3.98 |  |  | $ | 3.02 |
Strike Price (common) |  | $ | .69 |  |  | $ | 1.60 |
Time until expiration (years) |  |  | 2.48 |  |  |  | 3.48 |
Volatility |  |  | 60.0 | % |  |  | 60.0 | %
Risk-free interest rate |  |  | 4.68 | % |  |  | 3.00 | %
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):
Schedule of inventory |  |  |  |  |  |  |  |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Raw materials /purchased components |  | $ | 8,824 |  |  | $ | 6,323 |
Work in process |  |  | 3,686 |  |  |  | 3,463 |
Sub-assemblies /finished components |  |  | 2,387 |  |  |  | 2,118 |
Finished goods |  |  | 1,270 |  |  |  | 774 |
Total inventory |  | $ | 16,167 |  |  | $ | 12,678 |
Land and Building Land and building consist of the following (in thousands):
Schedule of land and building |  |  |  |  |  |  |  |
|  | June 30, 2023 |  |  | June 30, 2022 |
Land |  | $ | 3,684 |  |  | $ | 3,684 |
Building |  |  | 2,815 |  |  |  | 2,815 |
Total |  |  | 6,499 |  |  |  | 6,499 |
Less: accumulated depreciation |  |  | (250 | ) |  |  | (156 | )
|  | $ | 6,249 |  |  | $ | 6,343 |
On November 6, 2020, we acquired the Franklin Property for a total purchase price of $6.5 million, of which we paid $1.3 million in cash and the balance of $5.2 million we financed through Minnesota Bank & Trust (“MBT”) (see Note 8). We substantially completed the build-out of the property in the first quarter of fiscal 2022. In the fourth quarter of fiscal 2023 we substantially completed all of our validation activities, and we moved our repairs and assembly departments to the new facility. The building is being amortized on a straight-line basis over a period of 30 years. Equipment and Improvements Equipment and improvements consist of the following (in thousands):
Schedule of equipment and improvements |  |  |  |  |  |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Office furnishings and fixtures |  | $ | 1,957 |  |  | $ | 2,224 |
Machinery and equipment |  |  | 6,675 |  |  |  | 6,661 |
Automobiles |  |  | 21 |  |  |  | 21 |
Improvements |  |  | 4,737 |  |  |  | 4,271 |
Total |  |  | 13,390 |  |  |  | 13,177 |
Less: accumulated depreciation and amortization |  |  | (8,311 | ) |  |  | (8,344 | )
|  | $ | 5,079 |  |  | $ | 4,833 |
Depreciation expense for the years ended June 30, 2023 and 2022 amounted to $727,000 and $616,000, respectively. During fiscal 2023, fully depreciated assets in the amount of $760,000 were retired. During fiscal 2022, $87,000 of assets were retired either due to physical disposal or major part replacement with a net book value of $35,000 recorded as a loss on disposal of equipment in our consolidated income statement. Intangibles Intangibles consist of the following (in thousands):
Schedule of intangibles |  |  |  |  |  |
|  | June 30, 2023 |  |  | June 30, 2022 |
Patent-related costs |  | $ | 208 |  |  | $ | 208 |
Less accumulated amortization |  |  | (127 | ) |  |  | (90 | )
|  | $ | 81 |  |  | $ | 118 |
Amortization expense for the years ended June 30, 2023 and 2022 amounted to $37,000 and $16,000, respectively. Patent-related costs consist of legal fees incurred in connection with both patent applications and patent issuances, 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. During fiscal 2022, we impaired $84,000 of previously capitalized legal fees due to uncertainty relating to future benefit. This impairment expense was included in research and development costs in our consolidated income statement. Future amortization expense is estimated to be no more than $30,000 per year and all remaining costs are expected to be fully amortized within three years. Accrued Liabilities Accrued liabilities consist of the following (in thousands):
Schedule of accrued liabilities |  |  |  |  |  |  |  |
|  | June 30, |
|  | 2023 |  |  | 2022 |
Payroll and related items |  | $ | 650 |  |  | $ | 509 |
Accrued inventory in transit |  |  | 637 |  |  |  | 177 |
Accrued legal and professional fees |  |  | 216 |  |  |  | 275 |
Accrued bonuses |  |  | 400 |  |  |  | 430 |
Current portion of lease liability |  |  | 416 |  |  |  | 379 |
Warranty |  |  | 200 |  |  |  | 340 |
Accrued customer rebate |  |  | 480 |  |  |  | 517 |
Other |  |  | 136 |  |  |  | 124 |
Total accrued expenses |  | $ | 3,135 |  |  | $ | 2,751 |

X
- Definition The entire disclosures of supplemental information, including descriptions and amounts, related to the balance sheet, income statement, and/or cash flow statement. + References No definition available. + Details
Name: | us-gaap_AdditionalFinancialInformationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration