6.Short-Term and Long-Term Investments

We account for our investments in accordance with ASC 320, “Investments – Debt and Equity Securities”. Investments with a term to maturity between three months to one year are considered short-term investments and are classified as available-for-sale investments. Investments with a term to maturity beyond one year may be classified as available for sale if we reasonably expect the investment to be realized in cash or sold or consumed during the normal operating cycle of the business. Investments are classified as held-to-maturity if the term to maturity is greater than one year and we have the intent and ability to hold such investments to maturity. All investments are initially recognized at fair value. Subsequent measurement for available-for-sale investments is recorded at fair value. Unrealized gains and losses on available-for-sale investments are recorded in other comprehensive income. Held-to-maturity investments are subsequently measured at amortized cost. At each balance sheet date, we evaluate all investments for possible other-than-temporary impairment, which involves significant judgment. In making this judgment, we review factors such as the length of time and extent to which fair value has been below the cost basis, the anticipated recovery period, the financial condition of the issuer, the credit rating of the instrument and our ability and intent to hold the investment for a period of time which may be sufficient for recovery of the cost basis. Any losses determined to be other-than-temporary are charged as an impairment loss and recorded in earnings. If market, industry, and/or investee conditions deteriorate, future impairments may be incurred.

As of March 31, 2018 and June 30, 2017, we held restricted cash in short-term bank guarantees. The restricted cash provides financial assurance that we will fulfill certain customer obligations in China. The cash is restricted as to withdrawal or use while the related bank guarantee is outstanding. Interest is earned on the restricted cash and recorded as interest income. At March 31, 2018 and June 30, 2017, we had short-term bank guarantees of $72,000 and $239,000 respectively.

At March 31, 2018, we held a long-term investment in preferred stock that is not registered under the Securities Act of 1933, as amended and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The preferred stock investment is currently recorded at $725,000 after consideration of impairment charges recorded in fiscal years 2008 and 2009. We estimated that the fair market value of this investment at March 31, 2018 exceeded $725,000 based on an internal valuation model, which included the use of a discounted cash flow model. The fair market analysis considered the following key inputs:


	(i)	the underlying structure of the security;
	(ii)	the present value of the future principal, discounted at rates considered to reflect current market conditions; and
	(iii)	the time horizon that the market value of the security could return to its cost and be sold.

Under ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) such valuation assumptions are defined as Level 3 inputs.

The following table presents our Short-Term and Long-Term Investments by category at March 31, 2018 and June 30, 2017 (in thousands):



	March 31, 2018
	Cost		Fair Value or Carrying Value
Short-Term Investments
Bank Guarantees	$	72	$	72
Mutual Funds		39		39
Time/Fixed Deposits		2,326		2,326
Total Short-Term Investments	$	2,437	$	2,437

Long-Term Investments
Preferred Stock	$	3,700	$	725
Total Long-Term Investments		3,700		725

Total Investments	$	6,137	$	3,162


	June 30, 2017
	Cost		Fair Value or Carrying Value
Short-Term Investments
Bank Guarantees	$	239	$	239
Time/Fixed Deposits		1,333		1,333
Total Short-Term Investments	$	1,572	$	1,572

Long-Term Investments
Preferred Stock	$	3,700	$	725
Total Long-Term Investments	$	3,700	$	725

Total Investments	$	5,272	$	2,297