BUSINESS SEGMENTS

9 Months Ended

Mar. 31, 2020

Segment Reporting [Abstract]

BUSINESS SEGMENTS

Although the Company operates in four segments; the testing service industry (which performs structural and electronic tests of semiconductor devices), the designing and manufacturing of equipment (which equipment tests the structural integrity of integrated circuits and other products), distribution of various products from other manufacturers in Singapore and Southeast Asia, and the real estate segment in China, the Company generates revenue primarily from the manufacturing, testing and distribution segments. The Company accounts for a contract with a customer when there is approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. The Company’s revenues are measured based on consideration stipulated in the arrangement with each customer, net of any sales incentives and amounts collected on behalf of third parties, such as sales taxes. The revenues are recognized as separate performance obligations that are satisfied by transferring control of the product or service to the customer.

The revenue allocated to individual countries was based on where the customers were located. The allocation of the cost of equipment, the current year investment in new equipment and depreciation expense have been made on the basis of the primary purpose for which the equipment was acquired.

Significant Judgments

The Company’s arrangements with its customers include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. A product or service is considered distinct if it is separately identifiable from other deliverables in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer.

The Company allocates the transaction price to each performance obligation on a relative standalone selling price basis (“SSP”). Determining the SSP for each distinct performance obligation and allocation of consideration from an arrangement to the individual performance obligations and the appropriate timing of revenue recognition are significant judgments with respect to these arrangements. The Company typically establishes the SSP based on observable prices of products or services sold separately in comparable circumstances to similar clients. The Company may estimate SSP by considering internal costs, profit objectives and pricing practices in certain circumstances.

Warranties, discounts and allowances are estimated using historical and recent data trends. The Company includes estimates in the transaction price only to the extent that a significant reversal of revenue is not probable in subsequent periods. The Company’s products and services are generally not sold with a right of return, nor has the Company experienced significant returns from or refunds to its customers.

Manufacturing

The Company primarily derives revenue from the sale of both front-end and back-end semiconductor test equipment and related peripherals, maintenance and support of all these products, installation and training services and the sale of spare parts. The Company’s revenues are measured based on considerations stipulated in the arrangement with each customer, net of any sales incentives and amounts collected on behalf of third parties, such as sales taxes.

The Company recognizes revenue at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether the control has transferred by considering several indicators, including:

● whether the Company has a present right to payment;

● the customer has legal title;

● the customer has physical possession;

● the customer has significant risk and rewards of ownership; and

● the customer has accepted the product, or whether customer acceptance is considered a formality based on history of acceptance of similar products (for example, when the customer has previously accepted the same equipment, with the same specifications, and when we can objectively demonstrate that the tool meets all of the required acceptance criteria, and when the installation of the system is deemed perfunctory).

Not all of the indicators need to be met for the Company to conclude that control has transferred to the customer. In circumstances in which revenue is recognized prior to the product acceptance, the portion of revenue associated with its performance obligations of product installation and training services are deferred and recognized upon acceptance.

The majority of sales under the Manufacturing segment include a standard 12-month warranty. The Company has concluded that the warranty provided for standard products are assurance type warranties and are not separate performance obligations. Warranty provided for customized products are service warranties and are separate performance obligations. Transaction prices are allocated to this performance obligation using cost plus method. The portion of revenue associated with warranty service is deferred and recognized as revenue over the warranty period, as the customer simultaneously receives and consumes the benefits of warranty services provided by the Company.

Testing

The Company rendered testing services to manufacturers and purchasers of semiconductors and other entities who either lack testing capabilities or whose in-house screening facilities are insufficient. The Company primarily derives testing revenue from burn-in services, manpower supply and other associated services. SSP is directly observable from the sales orders. Revenue is allocated to performance obligations satisfied at a point in time depending upon terms of the sales order. Generally, there is no other performance obligation other than what has been stated inside the sales order for each of these sales.

Terms of contract that may indicate potential variable consideration included warranty, late delivery penalty and reimbursement to solve non-conformance issues for rejected products. Based on historical and recent data trends, it is concluded that these terms of the contract do not represent potential variable consideration. The transaction price is not contingent on the occurrence of any future event.

Distribution

The Company distributes complementary products, particularly equipment, industrial products and components by manufacturers mainly from the U.S., Europe, Taiwan and Japan. The Company recognizes revenue from product sales at a point in time when the Company has satisfied its performance obligation by transferring control of the product to the customer. The Company uses judgment to evaluate whether the control has transferred by considering several indicators discussed above. The Company recognizes the revenue at a point in time, generally upon shipment or delivery of the products to the customer or distributors, depending upon terms of the sales order. 

All inter-segment revenue was from the manufacturing segment to the testing and distribution segments. Total inter-segment revenue was $36 for the three months ended March 31, 2020, as compared to $15 for the same period in the last fiscal year. Corporate assets mainly consisted of cash and prepaid expenses. Corporate expenses mainly consisted of stock option expenses, salaries, insurance, professional expenses and directors' fees. Corporate expenses are allocated to the four segments. The following segment information table includes segment operating income or loss after including the corporate expenses allocated to the segments, which gets eliminated in the consolidation.

The following segment information is un-audited for the nine months ended March 31, 2020 and March 31, 2019:

Business Segment Information:

	Nine Months Ended Mar. 31,	Net Revenue		Operating Income/(Loss)			Total Assets		Depr. and Amort.		Capital Expenditures
Manufacturing	2020	$	8,881	$	(201	)	$	9,871	$	297	$	124
	2019	$	10,086	$	175		$	9,205	$	88	$	40
Testing Services	2020		12,018		(540	)		22,332		1,999		724
	2019		12,819		(134	)		22,842		1,647		2,535
Distribution	2020		6,338		599			869		3		-
	2019		5,587		492			780		-		-
Real Estate	2020		49		(82	)		3,584		51
	2019		81		(30	)		3,914		42		-
Fabrication Services *	2020		-		-			23		-		-
	2019		-		-			26		-		-
Corporate & Unallocated	2020		-		(94	)		117		-		-
	2019		-		(30	)		233		-		-
Total Company	2020	$	27,286	$	(318	)	$	36,796	$	2,350	$	848
	2019	$	28,573	$	473		$	37,000	$	1,777	$	2,575

* Fabrication services is a discontinued operation.

The following segment information is un-audited for the three month ended March 31, 2020 referenced below:

Business Segment Information:

	Three Months Ended Mar. 31,	Net Revenue		Operating Income/(Loss)			Total Assets		Depr. and Amort.		Capital Expenditures
Manufacturing	2020	$	2,519	$	(102	)	$	9,871	$	101	$	89
	2019	$	3,097	$	(8	)	$	9,205	$	30	$	39
Testing Services	2020		3,741		(447	)		22,332		655		15
	2019		3,989		(17	)		22,842		588		239
Distribution	2020		2,225		207			869		1		-
	2019		1,727		150			780		-		-
Real Estate	2020		16		(30	)		3,584		17
	2019		25		(13	)		3,914		14		-
Fabrication Services *	2020		-		-			23		-		-
	2019		-		-			26		-		-
Corporate & Unallocated	2020		-		5			117		-		-
	2019		-		11			233		-		-
Total Company	2020	$	8,501	$	(367	)	$	36,796	$	774	$	104
	2019	$	8,838	$	123		$	37,000	$	632	$	278

* Fabrication services is a discontinued operation.