Revenue and Financial Performance - In the first quarter of fiscal 2026, the company reported revenue of $1.3 million from buy-sell purchase orders, with a cost of revenue of $1.2 million[112]. - Revenues increased by 104% from $1.3 million for the three months ended November 30, 2024, to $2.6 million for the same period in 2025, driven primarily by a $1.3 million increase in other revenues from buy-sell purchase orders of equipment[129]. - The cost of revenues surged by 155% from $1.0 million in Q4 2024 to $2.5 million in Q4 2025, attributed to the costs associated with buy-sell purchase orders of equipment[135]. - Gross profit margin decreased to 1% for the three months ended November 30, 2025, down from 21% in the same period of 2024, primarily due to lower margins on buy-sell purchase orders[136]. - The company incurred a net loss attributable to stockholders of $742 thousand for the three months ended November 30, 2025, compared to a net loss of $547 thousand for the same period in 2024[166]. Product Development and Strategy - The company has developed advanced capabilities in LED manufacturing, including optimizing epitaxial growth processes and employing copper alloy base technology to improve chip performance[114]. - The company is focusing on expanding its product offerings in high-margin areas, such as LED modules and UV LED products, to improve gross margins and operating results[116]. - The company is adjusting its product mix by emphasizing sales of LED components over LED chips to respond to market trends and improve profitability[116]. - The company plans to enhance its product innovation strategy by focusing on technologically advanced and lower-cost products, particularly in the LED components market[120]. Market and Operational Challenges - The average selling price of the company's products is expected to decline due to competitive pressures, impacting revenues and gross margins[116]. - The company faces risks related to its reliance on chip suppliers, which could affect delivery schedules, quality assurance, and production costs[116]. - Inventory write-downs were recorded at $152 thousand for Q4 2025, compared to $96 thousand for Q4 2024, indicating increased challenges in inventory management[125]. Financial Position and Cash Flow - Cash and cash equivalents rose to $2.9 million as of November 30, 2025, up from $1.2 million as of November 30, 2024, indicating improved liquidity[120]. - Net cash provided by operating activities for the three months ended November 30, 2025, was $361 thousand, compared to net cash used in operating activities of $158 thousand for the same period in 2024[170]. - The company expects cash requirements to service debt and contractual obligations in fiscal 2026 to be approximately $1.9 million, which is anticipated to be funded through the issuance of additional equity[167]. - Net cash used in financing activities for the three months ended November 30, 2025, was $116 thousand, a decrease from $244 thousand for the same period in 2024[172]. Customer and Market Diversification - Sales to the three largest customers accounted for 69% of total revenues in Q4 2025, down from 78% in Q4 2024, highlighting a diversification in the customer base[120]. - The company is exploring opportunities in the China and India markets as part of its new strategy to drive growth[106]. Cost Management and Expenditures - The company is committed to reducing production costs to offset lower average selling prices, although current cost savings have limited impact on gross profit due to underutilization of manufacturing capacity[117]. - Selling, general and administrative expenses increased from $696 thousand for the three months ended November 30, 2024, to $703 thousand for the three months ended November 30, 2025, primarily due to a $28 thousand increase in shipping expense and a $22 thousand increase in cleaning expense[139]. - Capital expenditures for the three months ended November 30, 2025, were $30 thousand, a decrease from $118 thousand in the same period of 2024[173]. - The company plans to continue investing in capital expenditures to expand business operations and production capacity based on market conditions and customer demand[173]. Compliance and Risk Management - The company is focused on maintaining compliance with Nasdaq listing requirements to avoid potential delisting risks[116]. - Management is focused on controlling capital costs and maintaining financial flexibility, which may lead to a decrease in activity levels and capital expenditures as appropriate[173].

Financial Performance - Revenue for Q1 FY 2026 was $2.6 million, a decrease of 80.4% from $13.2 million in Q4 FY 2025[5] - GAAP net loss for Q1 FY 2026 was $742 thousand, or $(0.09) per diluted share, compared to a net loss of $1.2 million, or $(0.15) per diluted share in Q4 FY 2025[5] - GAAP gross margin decreased to 1% in Q1 FY 2026 from 2% in Q4 FY 2025[6] - Operating margin for Q1 FY 2026 was negative 39%, worsening from negative 7% in Q4 FY 2025[6] Cash and Assets - Cash and cash equivalents increased to $2.9 million as of November 30, 2025, up from $2.6 million at the end of Q4 FY 2025[6] - Total current assets decreased to $10.2 million from $11.3 million at the end of Q4 FY 2025[12] - Total liabilities decreased to $12.2 million from $12.8 million at the end of Q4 FY 2025[12] Expenses - Research and development expenses for Q1 FY 2026 were $356 thousand, slightly down from $362 thousand in Q4 FY 2025[14] - Selling, general and administrative expenses decreased to $703 thousand from $853 thousand in Q4 FY 2025[14] Foreign Currency Transactions - The company reported a foreign currency transaction gain of $21 thousand in Q1 FY 2026, compared to a gain of $453 thousand in Q4 FY 2025[14]

Core Insights - The company reported a decrease in total assets from $15,593,000 on August 31, 2025, to $14,231,000 on November 30, 2025, indicating a decline of approximately 8.7% [1][4] - Current assets decreased from $11,302,000 to $10,246,000, a reduction of about 9.3% [1][2] - Total liabilities also decreased from $12,813,000 to $12,162,000, reflecting a decline of approximately 5.1% [3][4] Current Assets - Cash and cash equivalents increased from $2,593,000 to $2,889,000, a rise of about 11.4% [1] - Accounts receivable decreased significantly from $3,588,000 to $1,867,000, a drop of approximately 48.1% [1][2] - Inventories also saw a decline from $4,776,000 to $3,923,000, a decrease of about 17.9% [1][2] - Prepaid expenses and other current assets increased from $345,000 to $1,567,000, a substantial rise of approximately 354.8% [1] Current Liabilities - Current liabilities decreased from $11,383,000 to $10,917,000, a reduction of about 4.1% [3] - Accounts payable saw a significant drop from $5,027,000 to $1,586,000, a decrease of approximately 68.4% [2][3] - Accrued expenses and other current liabilities increased from $3,776,000 to $6,778,000, an increase of about 79.3% [2][3] Shareholders' Equity - Total shareholders' equity decreased from $2,780,000 to $2,069,000, a decline of approximately 25.5% [4] - The accumulated deficit increased from $(189,811,000) to $(190,553,000), indicating a worsening financial position [3][4]

Core Viewpoint - SemiLEDs Corporation (NASDAQ:LEDS) is recognized as one of the fastest-growing semiconductor stocks, with a remarkable year-over-year revenue growth of 729.8% [1] Financial Performance - For fiscal Q4 2025, SemiLEDs reported revenue of $13.2 million, a decrease from $17.7 million in Q3, with a GAAP net loss of $1.2 million, equating to -$0.15 per share [2] - The gross margin for Q4 was 2%, while the operating margin was -7%. Cash reserves at the end of the quarter stood at $2.6 million [2] - For the full year FY2025, revenue surged to $43 million from $5.2 million in FY2024, with the GAAP net loss narrowing to $1.1 million from $2.0 million. The full-year gross margin declined to 6%, but the operating margin improved to -4% [2] Revenue Drivers and Business Model - The significant revenue increase was attributed to "buy-sell" purchase orders of equipment, which contributed to "Other revenues," leading to concentration risk and volatility in quarterly results [3] - Management is shifting towards a fabless model to reduce idle-capacity costs and focus on higher-margin modules and UV LED products for niche applications, which is expected to enhance operating results and cash flow [3] Company Overview - SemiLEDs develops and manufactures LED chips and components for various lighting applications, including general and specialty lighting, with operations based in Hsinchu, Taiwan [4]

Financial Performance - Revenues increased by 730% from $5.2 million in 2024 to $43 million in 2025, primarily driven by $38 million in sales from other revenues related to buy-sell purchase orders of equipment [253]. - Cost of revenues rose by 883% from $4.1 million in 2024 to $40.6 million in 2025, attributed to the costs associated with equipment from buy-sell purchase orders [257]. - Gross profit decreased to 6% of revenues in 2025 from 20% in 2024, mainly due to lower margins from equipment sales compared to product sales [258]. - The company incurred net losses attributable to stockholders of $1.1 million and $2.0 million for the years ended August 31, 2025 and 2024, respectively, while net cash provided by operating activities was $2.2 million in 2025 [291]. Liquidity and Cash Flow - The company reported cash and cash equivalents of $2.6 million and $1.7 million as of August 31, 2025 and 2024, respectively, indicating an improvement in liquidity [213]. - Cash and cash equivalents increased from $1.7 million in 2024 to $2.6 million in 2025, primarily to fund operating expenses and working capital requirements [275]. - Long-term debt decreased from $3.7 million in 2024 to $1.7 million in 2025, with significant loans secured by the company's headquarters building [277][280]. - The company estimates cash requirements to service debt and contractual obligations in fiscal 2026 to be approximately $1.9 million, expected to be funded through equity issuance and loan extensions [292]. Customer and Geographic Concentration - Revenues from the company's three largest customers accounted for 94% and 61% of total revenues for the years ended August 31, 2025 and 2024, respectively, highlighting significant customer concentration risk [213]. - Net revenues from India, Japan, the Netherlands, and the United States accounted for 97% and 78% of total net revenues for the years ended August 31, 2025 and 2024, respectively, showing geographic concentration [216]. Operational Efficiency and Cost Management - The company has implemented actions to accelerate operating cost reductions and improve operational efficiencies, including workforce reductions and exploring the sale of certain manufacturing equipment [213]. - Selling, general and administrative expenses are expected to decrease due to cost reduction initiatives, with no specific figures provided [222]. - Selling, general and administrative expenses were $2.9 million for both years, with a decrease in payroll expenses offset by an increase in bad debt expense [260]. Product Strategy and Market Conditions - The average selling prices for LED components are generally higher than for LED chips, and the average selling prices for lighting products are higher than for both LED chips and components, affecting overall revenue [211]. - The company anticipates continued reliance on buy-sell purchase orders for equipment, which have improved gross profit, operating results, and cash flows [206]. - The company plans to focus on developing and introducing new, technologically advanced LED products to meet evolving customer requirements and market developments [209]. - The company expects to face increased pricing pressures due to intense competition in the LED market, which may lead to declines in average selling prices and gross margins [207]. - The company has adjusted its product mix strategy by exiting certain high-volume but low unit selling price product lines to improve gross margins [209]. Research and Development - Research and development expenses primarily consist of employee salaries, bonuses, and other benefits, with no specific figures provided [221]. - Research and development expenses remained stable at $1.2 million for both years, with a slight decrease in materials and supplies [259]. Inventory and Asset Management - Inventory write-downs totaled $323 thousand in 2025, down from $411 thousand in 2024, primarily due to obsolescence [238]. - Inventory write-downs for the years ended August 31, 2025 and 2024 were $323 thousand and $411 thousand, respectively, indicating ongoing challenges with excess and obsolete inventory [248]. - No asset impairment was recognized for the year ended August 31, 2025, as expected undiscounted cash flows exceeded the carrying value of the asset group [242]. Taxation and Deferred Tax Assets - The corporate income tax rate in Taiwan is 20% for the years ended August 31, 2025 and 2024, with an alternative minimum tax rate of 12% [233]. - The company has provided a full valuation allowance on its deferred tax assets due to cumulative losses in recent years, indicating realization is not more likely than not [236]. - The effective tax rate for fiscal years 2024 and 2025 is expected to be approximately zero due to losses incurred by Taiwan Bandaoti Zhaoming Co., Ltd. and a full valuation allowance on deferred tax assets totaling $10.8 million and $13.6 million for 2025 and 2024, respectively [266][267]. Foreign Currency and Investment - The company reported a foreign currency transaction gain of $464 thousand in 2025, compared to a loss of $13 thousand in 2024 [226]. - A net foreign currency transaction gain of $464 thousand was recognized in 2025, compared to a loss of $13 thousand in 2024, due to exchange rate fluctuations [265]. - Investment loss from unconsolidated entities increased significantly to $958 thousand in 2025 from $3 thousand in 2024, reflecting higher losses from these entities [262]. Capital Expenditures - Capital expenditures for the years ended August 31, 2025 and 2024 were $569 thousand and $123 thousand, respectively, primarily for machinery and equipment purchases [298]. - The company plans to continue investing in capital expenditures to expand business operations and production capacity, while monitoring prices to maintain financial flexibility [299][300].

Revenue Performance - Revenue for Q4 fiscal 2025 was $13.2 million, down from $17.7 million in Q3 fiscal 2025, representing a decrease of approximately 25.4%[3] - Total revenues for fiscal year 2025 increased to $43 million, a significant rise from $5.2 million in fiscal year 2024, marking an increase of over 826.9%[5] Net Income and Loss - GAAP net loss for Q4 fiscal 2025 was $1.2 million, or $(0.15) per diluted share, compared to a net income of $223 thousand, or $0.03 per diluted share in Q3 fiscal 2025[3] - GAAP net loss for fiscal year 2025 was $1.1 million, or $(0.15) per diluted share, an improvement from a net loss of $2.0 million, or $(0.32) per diluted share in fiscal year 2024[5] Gross Margin - GAAP gross margin for Q4 fiscal 2025 decreased to 2%, down from 5% in Q3 fiscal 2025[4] - GAAP gross margin for fiscal year 2025 decreased to 6%, compared to 20% in fiscal year 2024[6] Cash and Liquidity - Cash and cash equivalents were $2.6 million as of August 31, 2025, compared to $1.7 million as of August 31, 2024, indicating an increase of approximately 53.3%[6] - Accounts receivable increased to $3.6 million in fiscal year 2025 from $416 thousand in fiscal year 2024[12] Operating Margin and Liabilities - The company reported a negative operating margin of 7% for Q4 fiscal 2025, compared to negative 0.4% in Q3 fiscal 2025[4] - Total current liabilities increased to $11.4 million as of August 31, 2025, up from $7.0 million as of August 31, 2024[12]

Core Insights - SemiLEDs Corporation reported a decline in revenue for the fourth quarter of fiscal 2025, with revenue at $13.2 million compared to $17.7 million in the previous quarter, resulting in a GAAP net loss of $1.2 million or $(0.15) per diluted share [2][3] - For the full fiscal year 2025, SemiLEDs achieved revenue of $43 million, a significant increase from $5.2 million in fiscal year 2024, although it still reported a net loss of $1.1 million [4][5] Financial Performance - Fourth quarter revenue was $13.2 million, down from $17.7 million in the third quarter, with a GAAP net loss of $1.2 million compared to a net income of $223 thousand in the prior quarter [2][3] - The gross margin for the fourth quarter decreased to 2% from 5% in the third quarter, while the operating margin fell to negative 7% from negative 0.4% [3] - For fiscal year 2025, revenue increased to $43 million from $5.2 million in fiscal year 2024, with a GAAP net loss of $1.1 million compared to a net loss of $2.0 million in the previous year [4][5] - The gross margin for fiscal year 2025 was 6%, down from 20% in fiscal year 2024, while the operating margin improved to negative 4% from negative 57% [5] Cash Position - As of August 31, 2025, the company's cash and cash equivalents were $2.6 million, slightly up from $2.4 million at the end of the third quarter [3] - Total current assets increased to $11.3 million from $5.9 million year-over-year, while total assets rose to $15.6 million from $11.1 million [9] Operational Insights - SemiLEDs develops and manufactures LED chips and components for various applications, including general lighting and specialty industrial uses [6] - The company sells a range of LED chips, including blue, white, green, and UV [6]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) This section details the company's financial performance, position, cash flows, and related disclosures, including management's analysis and internal controls [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements for May 31, 2025, reflect significant revenue growth and profitability, driven by new equipment orders, alongside increased inventories and accounts payable [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of May 31, 2025, shows a substantial increase in assets and liabilities, primarily driven by inventories and accounts payable Condensed Consolidated Balance Sheet Highlights (in thousands of U.S. dollars) | Account | May 31, 2025 (Unaudited) | August 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $2,441 | $1,671 | | Inventories | $11,933 | $3,574 | | **Total Current Assets** | **$17,721** | **$5,962** | | **Total Assets** | **$23,180** | **$11,138** | | **Liabilities & Equity** | | | | Accounts payable | $10,849 | $137 | | **Total Current Liabilities** | **$17,567** | **$7,022** | | **Total Liabilities** | **$19,186** | **$8,889** | | **Total Shareholders' Equity** | **$3,994** | **$2,249** | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) The company achieved net income for the three and nine months ended May 31, 2025, driven by a substantial increase in revenue from new business activities Statement of Operations Summary (in thousands of U.S. dollars, except per share data) | Metric | Three Months Ended May 31, 2025 | Three Months Ended May 31, 2024 | Nine Months Ended May 31, 2025 | Nine Months Ended May 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues, net | $17,651 | $1,323 | $29,784 | $3,859 | | Gross Profit | $939 | $543 | $2,202 | $900 | | Loss from Operations | $(62) | $(473) | $(609) | $(2,124) | | Net Income (Loss) | $223 | $(316) | $64 | $(1,469) | | Basic EPS | $0.03 | $(0.04) | $0.01 | $(0.25) | [Unaudited Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow turned positive for the nine months ended May 31, 2025, driven by higher net income and favorable working capital changes Cash Flow Summary (Nine Months Ended, in thousands of U.S. dollars) | Cash Flow Activity | May 31, 2025 | May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,940 | $(570) | | Net cash used in investing activities | $(571) | $(46) | | Net cash used in financing activities | $(502) | $(336) | | **Net Increase (Decrease) in Cash** | **$782** | **$(898)** | - Noncash financing activities included the issuance of **$1.6 million** in common stock to repay a long-term loan[21](index=21&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail business operations, accounting policies, and key disclosures including going concern uncertainty, high customer concentration, and related-party debt transactions - The company's business focuses on developing, manufacturing, and selling high-performance LEDs, with components, modules, and systems as core products[24](index=24&type=chunk) - Historical operating losses raise substantial doubt about the company's ability to continue as a **going concern**, despite management's liquidity plan[30](index=30&type=chunk)[31](index=31&type=chunk) - Customer concentration is extremely high, with one customer representing **94% of revenues** for the three months ended May 31, 2025, due to buy-sell purchase orders[44](index=44&type=chunk) - Significant related-party transactions include repaying **$1.6 million** of loan principal to the CEO and largest shareholder by issuing common stock on February 28, 2025[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant revenue increase and profitability to new buy-sell equipment orders, while acknowledging lower gross margins and improved but still challenged liquidity [Results of Operations](index=37&type=section&id=Results%20of%20Operations) Revenue surged for both the three and nine months ended May 31, 2025, primarily due to buy-sell equipment orders, though gross margin percentages significantly declined Revenue and Gross Profit Comparison (Three Months Ended May 31, in thousands of U.S. dollars) | Metric | 2025 | 2024 | Change % | | :--- | :--- | :--- | :--- | | Total Revenues, net | $17,651 | $1,323 | 1,234% | | Other Revenues | $17,214 | $698 | 2,366% | | Gross Profit | $939 | $543 | 73% | | Gross Margin % | 5% | 41% | - | Revenue and Gross Profit Comparison (Nine Months Ended May 31, in thousands of U.S. dollars) | Metric | 2025 | 2024 | Change % | | :--- | :--- | :--- | :--- | | Total Revenues, net | $29,784 | $3,859 | 672% | | Other Revenues | $27,893 | $1,458 | 1,813% | | Gross Profit | $2,202 | $900 | 145% | | Gross Margin % | 7% | 23% | - | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved with increased cash and positive operating cash flow, driven by new business, though future funding relies on loan extensions and potential financing - Cash and cash equivalents increased to **$2.4 million** as of May 31, 2025, from **$1.7 million** as of August 31, 2024[159](index=159&type=chunk) Cash Flow Summary (Nine Months Ended, in thousands of U.S. dollars) | Category | May 31, 2025 | May 31, 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $1,940 | $(570) | | Net cash used in investing activities | $(571) | $(46) | | Net cash used in financing activities | $(502) | $(336) | - The company estimates cash requirements of approximately **$1.9 million** to service debt and obligations in fiscal 2025, expecting to fund this through equity issuance and loan extensions[182](index=182&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=50&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has indicated that this section is not applicable - This section is **not applicable**[190](index=190&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of May 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were **effective** at a reasonable assurance level as of May 31, 2025[194](index=194&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended May 31, 2025[195](index=195&type=chunk) [Part II. Other Information](index=53&type=section&id=Part%20II.%20Other%20Information) This section addresses legal proceedings, key risk factors, and other miscellaneous disclosures including equity sales and defaults [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) As of May 31, 2025, the company reported that there were no material pending legal proceedings or claims against it - There were **no material pending legal proceedings or claims** as of May 31, 2025[199](index=199&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks including potential Nasdaq delisting, revenue volatility from new buy-sell orders, and impacts from trade tariffs on competitiveness - The company faces a risk of Nasdaq delisting if it fails to maintain the minimum **stockholders' equity of $2.5 million**, despite regaining compliance as of February 28, 2025[200](index=200&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Significant revenue from recent buy-sell purchase orders introduces **uncertainty and potential volatility** to future revenues, costs, and other financial metrics[205](index=205&type=chunk)[206](index=206&type=chunk) - Trade tariffs, such as the **32% U.S. tariff** on goods from Taiwan, pose a risk to the company's cost-competitiveness, as **28% of fiscal 2024 sales** were to the United States[208](index=208&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=54&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - **None reported**[209](index=209&type=chunk) [Defaults Upon Senior Securities](index=54&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - **None reported**[211](index=211&type=chunk) [Mine Safety Disclosures](index=54&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - This section is **not applicable**[212](index=212&type=chunk) [Other Information](index=54&type=section&id=Item%205.%20Other%20Information) During the third quarter, no director or officer of the company adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended May 31, 2025[213](index=213&type=chunk)

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) For the third quarter of fiscal year 2025, SemiLEDs reported a significant revenue increase to $17.7 million from $10.9 million in the previous quarter, though profitability declined with GAAP net income decreasing to $223 thousand from $388 thousand, and gross margin falling to 5% from 9% Financial Performance Summary | Financial Metric | Q3 FY2025 | Q2 FY2025 | Change | | :--- | :--- | :--- | :--- | | Revenue (Millions USD) | $17.7 | $10.9 | Increased | | GAAP Net Income (Thousands USD) | $223 | $388 | Decreased | | GAAP Diluted EPS (USD) | $0.03 | $0.05 | Decreased | | Gross Margin (%) | 5 | 9 | Decreased | | Operating Margin (%) | -0.4 | 1 | Decreased | - The company's cash and cash equivalents remained stable at **$2.4 million** at the end of both the third and second quarters of fiscal 2025[4](index=4&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) This section presents SemiLEDs Corporation's unaudited condensed consolidated financial statements, including balance sheets reflecting stable assets and reduced liabilities, and statements of operations detailing revenue growth and margin compression for the three months ended May 31, 2025 [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) As of May 31, 2025, SemiLEDs maintained stable total assets at **$23.18 million**, with a slight decrease in total liabilities to **$19.19 million** and an increase in stockholders' equity to **$3.99 million**, alongside a notable shift in current liability composition Condensed Consolidated Balance Sheet Highlights | Balance Sheet Items | May 31, 2025 (Thousands USD) | February 28, 2025 (Thousands USD) | | :--- | :--- | :--- | | Total current assets | $17,721 | $18,244 | | Total Assets | $23,180 | $23,186 | | Total current liabilities | $17,567 | $17,974 | | Total Liabilities | $19,186 | $19,591 | | Total SemiLEDs stockholders' equity | $3,994 | $3,595 | - A notable change in current liabilities was observed, with **Accounts Payable increasing from $445 thousand to $10.8 million**, while **Accrued expenses and other current liabilities decreased from $15.1 million to $4.2 million**[9](index=9&type=chunk) [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended May 31, 2025, revenues increased to **$17.65 million**, yet higher costs resulted in a lower gross profit of **$939 thousand** and an operating loss of **$62 thousand**, contrasting with the prior quarter's operating income Condensed Consolidated Statements of Operations Highlights | Statement of Operations | Three Months Ended May 31, 2025 (Thousands USD) | Three Months Ended February 28, 2025 (Thousands USD) | | :--- | :--- | :--- | | Revenues, net | $17,651 | $10,872 | | Gross profit | $939 | $1,003 | | (Loss) income from operations | $(62) | $110 | | Net income | $223 | $388 | | Basic and diluted EPS | $0.03 | $0.05 |

Revenue and Sales Performance - Revenue from buy-sell purchase orders in Q2 2025 was $9.4 million, with a cost of revenue of $8.9 million[105]. - Revenues increased to $10.9 million for the three months ended February 28, 2025, from $886 thousand for the same period in 2024, driven primarily by a $10.0 million increase in other revenues[122]. - Sales of LED chips were $29 thousand for the three months ended February 28, 2025, compared to $1 thousand for the same period in 2024, reflecting varying volumes sold[123]. - Revenues from LED components rose to $682 thousand for the three months ended February 28, 2025, up from $545 thousand in the prior year, due to higher volumes sold[124]. - Revenues increased from $2.5 million for the six months ended February 29, 2024, to $12.1 million for the six months ended February 28, 2025, driven by a $10.0 million increase in sales of other revenues[139]. - LED chip sales were $94 thousand for the six months ended February 28, 2025, compared to $59 thousand for the same period in 2024, reflecting a 59% increase[140]. - Other revenues surged to $10.7 million for the six months ended February 28, 2025, from $760 thousand in the prior year, marking a 1,305% increase[142]. Profitability and Margins - Gross profit represented 9% of revenues for the three months ended February 28, 2025, down from 13% in the same period of 2024, primarily due to the buy-sell purchase orders of equipment[128]. - Gross profit rose from $357 thousand for the six months ended February 29, 2024, to $1.3 million for the six months ended February 28, 2025, with a gross margin of 10% compared to 15% in the previous year[145]. Operating Expenses and R&D - Total operating expenses decreased to $893 thousand for the three months ended February 28, 2025, from $944 thousand in the prior year, reflecting a reduction in selling, general, and administrative expenses[129]. - Research and development expenses increased to $279 thousand for the three months ended February 28, 2025, from $251 thousand in the same period of 2024, primarily due to higher materials and supplies costs[130]. - Operating expenses decreased from $2.0 million for the six months ended February 29, 2024, to $1.8 million for the six months ended February 28, 2025, a reduction of 10%[146]. - Research and development expenses decreased from $623 thousand to $500 thousand, a decline of 20%[147]. Cash Flow and Liquidity - Cash and cash equivalents increased to $2.4 million as of February 28, 2025, from $1.6 million as of February 29, 2024, indicating improved liquidity[114]. - Cash and cash equivalents increased from $1.7 million as of August 31, 2024, to $2.4 million as of February 28, 2025[159]. - As of February 28, 2025, the company reported cash and cash equivalents of $2.4 million and net cash provided by operating activities of $1.2 million for the six months ended February 28, 2025[182][186]. - The company reported an increase in cash flows provided by operating activities due to a $1.0 million increase in net income and a $12.5 million increase in accrued expenses[187]. Debt and Financing - Long-term debt decreased from $3.7 million as of August 31, 2024, to $1.9 million as of February 28, 2025[164]. - The company entered into secured loan agreements totaling $3.2 million with an annual interest rate of 8%, with maturity dates extended to January 15, 2025[167][169]. - On February 9, 2024, the company repaid $800,000 of loan principal by issuing 629,921 shares at a closing price of $1.27 per share[171][173]. - The outstanding principal of convertible unsecured promissory notes was zero as of February 28, 2025, after conversion of $1.6 million into 1,228,128 shares at a price of $1.31 per share[181][180]. - The total loans as of February 28, 2025, amounted to $800,000, secured by a second priority security interest on the company's headquarters building[177]. Market and Strategic Focus - The company is focusing on optimizing its epitaxial growth processes and developing low-cost Chip Scaled Packaging (CSP) technology to enhance manufacturing efficiency[107]. - The average selling price of products is expected to decline due to competitive pressures, impacting revenue and gross margins[109]. - The company plans to shift its strategy towards selling LED components rather than just LED chips to improve gross margins and operating results[109]. - The company aims to continue innovating in product design and manufacturing efficiencies to meet evolving customer requirements and technological standards[110]. - The company is heavily reliant on a few select markets, including India, Japan, the Netherlands, and the United States, for its revenue[102]. - The company is exploring opportunities in the China and India markets as part of its new strategic direction[99]. Inventory and Risk Management - Inventory write-downs were $50 thousand for the three months ended February 28, 2025, compared to $77 thousand for the same period in 2024, indicating improved inventory management[117]. - Sales to the three largest customers accounted for 93% and 90% of total revenues for the three and six months ended February 28, 2025, respectively, highlighting revenue concentration risk[114]. Foreign Currency and Other Losses - The company recognized a net foreign currency transaction loss of $37 thousand for the six months ended February 28, 2025, compared to a gain of $12 thousand for the same period in 2024[154]. Income and Expenditures - The company incurred a net income of $388,000 and a net loss of $559,000 during the three months ended February 28, 2025, compared to the same period in 2024[182]. - Capital expenditures for the six months ended February 28, 2025, were $238,000, an increase from $69,000 in the same period in 2024[190]. - Net cash used in investing activities was $258,000 for the six months ended February 28, 2025, primarily for property, plant, and equipment purchases[188].