[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].

Revenue Performance - Revenue for Q2 FY2025 increased to $10.9 million, up from $1.3 million in Q1 FY2025, representing a growth of 738%[3] - SemiLEDs reported a gross profit of $1.0 million for Q2 FY2025, compared to $260 thousand in Q1 FY2025[12] Profitability Metrics - GAAP net income attributable to SemiLEDs stockholders for Q2 FY2025 was $388 thousand, or $0.05 per diluted share, compared to a net loss of $547 thousand, or $(0.08) per diluted share in Q1 FY2025[3] - GAAP gross margin for Q2 FY2025 decreased to 9%, down from 21% in Q1 FY2025[4] - Operating margin for Q2 FY2025 was 1%, compared to negative 52% in Q1 FY2025[4] Cash and Assets - Cash and cash equivalents increased to $2.4 million at February 28, 2025, from $1.2 million at the end of Q1 FY2025[4] - Total current assets rose to $18.2 million as of February 28, 2025, compared to $5.5 million at the end of Q1 FY2025[10] Liabilities - Total liabilities increased to $19.6 million as of February 28, 2025, compared to $8.8 million at the end of Q1 FY2025[10] Research and Development - Research and development expenses for Q2 FY2025 were $279 thousand, up from $221 thousand in Q1 FY2025[12] Future Outlook - The company anticipates revenue growth opportunities in the LED industry and plans to capitalize on market trends[7]

Revenue and Sales Performance - Total revenues decreased by 24% to $1.3 million for the three months ended November 30, 2024, from $1.6 million for the same period in 2023, primarily due to a $514 thousand decrease in LED components[129] - Revenues from LED components were $561 thousand, representing 44% of total revenues for the three months ended November 30, 2024, down from $1,075 thousand or 65% in 2023[131] - Revenues from other operating revenues increased to $576 thousand, representing 46% of total revenues for the three months ended November 30, 2024, up from 28% in 2023[133] - Sales to the three largest customers accounted for 78% and 72% of total revenues for the three months ended November 30, 2024, and 2023, respectively[1] Cost Management and Profitability - The estimated cost of revenue associated with these purchase orders is approximately $12.7 million, with potential revenue recognition in Q2 or Q3 of fiscal 2025 depending on shipment delays[117] - Gross profit increased to $260 thousand for the three months ended November 30, 2024, with a gross margin of 21%, compared to $245 thousand and 15% in 2023[136] - Cost of revenues decreased by 29% to $1.0 million for the three months ended November 30, 2024, from $1.4 million in 2023, primarily due to lower volumes sold for LED components[135] - The company aims to enhance gross margins and reduce net losses to restore profitability, while also introducing new products that can be produced profitably[107] Liquidity and Financial Position - Cash and cash equivalents were $1.2 million as of November 30, 2024, down from $1.7 million on August 31, 2024[120] - The company plans to issue additional equity to stockholders to address liquidity needs and reduce losses[170] - Estimated cash requirements to service debt and contractual obligations in fiscal 2025 are approximately $3.4 million, expected to be funded through additional equity issuance[170] - As of November 30, 2024, the company had no available credit facility[149] Research and Development - Research and development expenses decreased to $221 thousand in Q4 2024 from $372 thousand in Q4 2023, a reduction of 41%[137] - The company plans to continue innovating in product design and improve manufacturing efficiencies to meet evolving customer requirements[1] - The company is developing advanced capabilities in LED technology, including low-cost Chip Scaled Packaging (CSP) and multi-pixel Mini LED packages[116] Competitive Environment and Market Strategy - The company is concentrating on expanding sales and distribution channels in niche LED markets, including UV LED and architectural lighting[107] - The company is pursuing growth opportunities in the LED module solution market, emphasizing high-quality and flexible LED system solutions[118] - The company is facing competitive pressures that may lead to a decline in average selling prices, impacting revenues and gross margins[118] Operating Expenses - Selling, general and administrative expenses fell to $696 thousand in Q4 2024 from $742 thousand in Q4 2023, a decrease of 6%[138] - Total operating expenses were $917 thousand in Q4 2024, down 14% from $1,064 thousand in Q4 2023, representing 73% of revenues compared to 65% in the prior year[137] Foreign Currency and Other Income - The company recognized a net foreign currency transaction loss of $102 thousand in Q4 2024, compared to a gain of $44 thousand in Q4 2023[143] - Other income, net increased to $282 thousand in Q4 2024 from $259 thousand in Q4 2023, primarily due to higher rental income[142] Debt and Equity - Long-term debt totaled $3.6 million as of November 30, 2024, down from $3.7 million as of August 31, 2024[153] - The total principal and accrued interest of the Notes converted to common stock amounted to $1,608,848, resulting in the issuance of 1,228,128 shares at a conversion price of $1.31 per share[167] Cash Flow and Investments - Net cash used in operating activities increased from $79 thousand in 2023 to $158 thousand in 2024, primarily due to a $398 thousand increase in inventories[174] - Capital expenditures for the three months ended November 30, 2024, were $118 thousand, up from $50 thousand in 2023, focusing on machinery and equipment purchases[177] - Net cash used in investing activities rose to $122 thousand in 2024 from $12 thousand in 2023, driven by increased purchases of property, plant, and equipment[175] - Net cash used in financing activities increased to $244 thousand in 2024 from $114 thousand in 2023, mainly due to a $132 thousand increase in acquisition of noncontrolling interest[176]

Revenue and Net Loss - Revenue for Q1 fiscal 2025 remained flat at $1.3 million compared to Q4 fiscal 2024[1] - GAAP net loss decreased to $547 thousand in Q1 fiscal 2025 from $560 thousand in Q4 fiscal 2024[1] - Net loss per share remained flat at $(0.08) in Q1 fiscal 2025 compared to Q4 fiscal 2024[9] Gross Margin and Operating Margin - GAAP gross margin improved to 21% in Q1 fiscal 2025 from 12% in Q4 fiscal 2024[3] - Operating margin improved to negative 52% in Q1 fiscal 2025 from negative 62% in Q4 fiscal 2024[3] Cash and Cash Equivalents - Cash and cash equivalents decreased to $1.2 million at November 30, 2024 from $1.7 million at the end of Q4 fiscal 2024[3] Total Assets and Liabilities - Total current assets decreased to $5.493 million at November 30, 2024 from $5.962 million at August 31, 2024[7] - Total liabilities decreased to $8.820 million at November 30, 2024 from $8.889 million at August 31, 2024[7] Operating Expenses - Total operating expenses decreased to $917 thousand in Q1 fiscal 2025 from $978 thousand in Q4 fiscal 2024[9] Stockholders' Equity - SemiLEDs stockholders' equity decreased to $1.580 million at November 30, 2024 from $2.201 million at August 31, 2024[7]

Financial Performance - Revenues decreased by 13% from $6.0 million in 2023 to $5.2 million in 2024, primarily due to a $689 thousand decrease in LED components sales[202] - Cost of revenues decreased by 17% from $5.0 million in 2023 to $4.1 million in 2024, mainly due to lower product volumes sold[208] - Gross profit increased from $1.0 million in 2023 to $1.1 million in 2024, with a gross margin percentage of 20% compared to 17% in 2023[209] - Revenues from LED components represented 51% of total revenues in 2024, down from 56% in 2023, indicating a decrease in sales volume[203] - Revenues from lighting products decreased from $321 thousand in 2023 to $212 thousand in 2024, representing 4% of total revenues[204] - Other revenues increased from 37% of total revenues in 2023 to 43% in 2024, driven by service provisions and raw material sales[206] - Net losses attributable to SemiLEDs stockholders were $2.0 million and $2.7 million for the years ended August 31, 2024 and 2023, respectively[243] Cash and Debt Management - Cash and cash equivalents decreased from $2.6 million in 2023 to $1.7 million in 2024[155] - Long-term debt decreased from $6.4 million in 2023 to $3.7 million in 2024[171] - Cash requirements to service debt and contractual obligations for fiscal 2025 are estimated at approximately $3.4 million, expected to be funded through additional equity issuance and loan extensions[244] - Outstanding principal of notes decreased from $1.4 million in 2023 to zero in 2024[248] - Cash and cash equivalents as of August 31, 2024, totaled $1.7 million[243] Customer Concentration - Sales to the three largest customers accounted for 61% of revenues in 2024, up from 53% in 2023[155] - Revenues from the ten largest customers represented 91% of total revenues for both 2024 and 2023[161] - Net revenues from the Netherlands, Taiwan, the United States, and Japan accounted for 91% of total revenues in 2024, compared to 89% in 2023[162] Operational Efficiency - The company plans to focus on high-quality LED module solutions to improve gross margins and operating results[153] - The average selling prices for LED products have been declining, impacting revenues and gross margins[151] - The company is exploring opportunities to sell equipment related to vertical LED chip manufacturing to reduce idle capacity charges[155] - The company anticipates fluctuations in gross margins due to changes in product mix and manufacturing capacity utilization[153] - The company aims to continue innovating in product design and manufacturing efficiencies to meet evolving customer requirements[153] - The company adopted a strategy to adjust its product mix by exiting low-margin product lines to focus on more profitable products[207] Research and Development - Research and development expenses primarily consist of employee salaries, bonuses, and other benefits, with no specific figures provided[167] - Research and development expenses were $1.2 million in 2024, down from $1.4 million in 2023, primarily due to reduced payroll and material costs[210] Expenses and Taxation - Selling, general and administrative expenses are expected to decrease due to cost reduction initiatives, although specific figures are not mentioned[168] - Selling, general and administrative expenses decreased from $3.1 million in 2023 to $2.9 million in 2024, attributed to lower payroll and insurance expenses[211] - The corporate income tax rate in Taiwan is 20%, with an alternative minimum tax rate of 12% applicable[180] - The effective tax rate is expected to be approximately zero for both fiscal years 2024 and 2023 due to incurred losses and full valuation allowance on deferred tax assets[217] - Full valuation allowances on net deferred tax assets were $13.6 million in 2024, down from $23.8 million in 2023, reflecting a decrease of 42.5%[218] Asset Management - A gain of $49 thousand was recognized on the disposal of long-lived assets for the year ended August 31, 2024, compared to zero in 2023[169] - Inventory write-downs totaled $411 thousand for the year ended August 31, 2024, compared to $627 thousand in 2023, primarily due to obsolescence[184] - Inventory write-downs were $411 thousand in 2024 and $627 thousand in 2023, primarily related to finished goods and work in process[208] - No asset impairment was recognized for the year ended August 31, 2024, as expected undiscounted cash flows exceeded carrying value[189] Investment and Financing Activities - Capital expenditures were $123 thousand in 2024, down from $200 thousand in 2023, with future investments planned based on market conditions and customer demand[255] - Net cash used in investing activities decreased from $321 thousand in 2023 to $101 thousand in 2024, attributed to reduced cash used for machinery and equipment purchases[253] - Net cash used in financing activities slightly decreased from $456 thousand in 2023 to $449 thousand in 2024, primarily due to a decrease in long-term debt repayment[254] - Investment loss from unconsolidated entities increased from $1 thousand in 2023 to $3 thousand in 2024, primarily due to increased losses of the unconsolidated entities[214] - Other income, net rose from $1.1 million in 2023 to $1.2 million in 2024, reflecting a growth of approximately 9.1%[215] - Net foreign currency transaction loss was $13 thousand in 2024 compared to $52 thousand in 2023, indicating a reduction of 75%[216]

Revenue Performance - Revenue for Q4 2024 was $1.3 million, unchanged from Q3 2024, while fiscal year 2024 revenue decreased to $5.2 million from $6.0 million in fiscal year 2023[3][5] Net Loss - GAAP net loss for Q4 2024 increased to $560 thousand, or $(0.08) per diluted share, compared to a net loss of $319 thousand, or $(0.04) per diluted share in Q3 2024[3][5] - The company reported a net loss attributable to stockholders of $2.0 million for fiscal year 2024, an improvement from a net loss of $2.7 million in fiscal year 2023[5] Gross Margin - GAAP gross margin for Q4 2024 decreased to 12%, down from 41% in Q3 2024, while fiscal year 2024 gross margin increased to 20% from 17% in fiscal year 2023[4][6] Operating Margin - Operating margin for Q4 2024 was negative 62%, compared to negative 36% in Q3 2024, with fiscal year 2024 operating margin remaining at negative 57%[4][6] Cash and Assets - Cash and cash equivalents remained at $1.7 million as of August 31, 2024, down from $2.6 million a year earlier[6][12] - Total current liabilities decreased to $7.0 million as of August 31, 2024, from $9.7 million a year earlier[12] - Total assets decreased to $11.1 million as of August 31, 2024, from $13.5 million a year earlier[12] Expenses - Research and development expenses for fiscal year 2024 were $1.16 million, down from $1.35 million in fiscal year 2023[14] - Selling, general and administrative expenses for fiscal year 2024 were $2.89 million, compared to $3.06 million in fiscal year 2023[14]

Financial Performance - Total revenues decreased by 21% to $1.323 million for the three months ended May 31, 2024, compared to $1.679 million for the same period in 2023[121]. - Revenues decreased by 21% to $1.3 million for the three months ended May 31, 2024, from $1.7 million for the same period in 2023[123]. - Revenues for the nine months ended May 31, 2024, decreased to $3.9 million, down from $4.5 million for the same period in 2023, reflecting a $667 thousand decline[135]. - Revenues from LED components dropped to $520 thousand (39% of total revenues) in Q2 2024, down from $1.08 million (64% of total revenues) in Q2 2023[123][124]. - Gross profit increased by 125% to $543 thousand, representing 41% of total revenues for the three months ended May 31, 2024, compared to 14% for the same period in 2023[121]. - Gross profit increased to $543 thousand for the three months ended May 31, 2024, compared to $241 thousand for the same period in 2023, due to higher-margin product sales[125]. - Gross profit for the nine months ended May 31, 2024, was $900 thousand, compared to $966 thousand for the same period in 2023, with a gross margin of 23%[138]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $1.7 million as of May 31, 2024, down from $3.0 million as of May 31, 2023[113]. - Cash and cash equivalents decreased from $2.6 million as of August 31, 2023, to $1.7 million as of May 31, 2024[147]. - Net cash used in operating activities for the nine months ended May 31, 2024, was $570 thousand, indicating ongoing operational challenges[160]. - Net cash used in operating activities for the nine months ended May 31, 2024, was $570 thousand, a decrease from $645 thousand in the same period of 2023[165]. - Net cash used in investing activities for the nine months ended May 31, 2024, was $46 thousand, down from $228 thousand in 2023, primarily for property, plant, and equipment purchases[166]. - Net cash used in financing activities for the nine months ended May 31, 2024, was $336 thousand, a slight decrease from $354 thousand in 2023, mainly due to long-term debt repayments[167]. - A $263 thousand decrease in accounts receivable contributed to the reduction in cash flows used in operating activities for the nine months ended May 31, 2024[165]. - The company had no available credit facility as of July 5, 2024, indicating potential liquidity constraints[147]. - The estimated cash requirements to service debt and contractual obligations in fiscal 2024 is approximately $3.4 million, funded through equity issuance and loan extensions[162]. Expenses and Cost Management - Total operating expenses decreased to $1.016 million (77% of revenues) in Q2 2024, down from $1.222 million (73% of revenues) in Q2 2023[127]. - Research and development expenses were $320 thousand for Q2 2024, down from $372 thousand in Q2 2023, primarily due to reduced payroll and material costs[127]. - Selling, general and administrative expenses decreased to $696 thousand in Q2 2024 from $850 thousand in Q2 2023, mainly due to lower payroll and professional service fees[128]. - The company has undertaken cost reduction programs to transform into a profitable operation amid significant losses since inception[160]. Market Strategy and Product Development - The company emphasizes the importance of successfully introducing new products that are profitable enough to cover development and production costs[99]. - The company is concentrating on expanding sales and distribution channels, particularly in niche LED markets such as UV LED and architectural lighting[99]. - The company plans to focus on profitable growth in LED module solutions and has adjusted its product mix to emphasize higher-margin products[111]. - The company aims to continue innovating in product design and manufacturing efficiencies to meet evolving customer requirements[111]. - The company is exploring strategies to exploit the China and India markets for growth opportunities[100]. - The average selling price of LED products is expected to decline due to competitive pricing pressures and market conditions[111]. Risks and Challenges - The company is focused on improving liquidity and accessing alternative funding sources, with potential risks if common stock is delisted from the Nasdaq Capital Market[110]. - The company faces risks from competitive pressures and the potential loss of key personnel, which could impact operations[99]. - The company is subject to various risks, including macroeconomic developments and supply chain delays that could affect revenue generation[101]. - The company has not assumed any obligation to update or revise forward-looking statements based on new information or future events[102]. - There is no assurance that additional debt or equity financing will be available on favorable terms[162]. - The company may need to consider alternative financing sources if positive cash flows from operations are not generated[162]. - The company expects loans with the Chairman, CEO, and largest shareholder to be extended upon maturity, but there are no assurances regarding the success of planned capital-raising activities[162]. Shareholder and Equity Information - The company has established an at-the-market equity program allowing the sale of up to $20 million in common stock, but has sold zero shares to date in fiscal 2024[110]. - The company did not sell any shares under its ATM program in fiscal year 2023 or in the third quarter of fiscal 2024, with the program expiring on June 8, 2024[161]. - Long-term debt decreased from $6.4 million as of August 31, 2023, to $4.0 million as of May 31, 2024, primarily due to the conversion of convertible unsecured promissory notes[148].

Financial Performance - Revenue for Q3 FY 2024 increased to $1.3 million, up from $886 thousand in Q2 FY 2024, representing a 46.5% increase[1] - GAAP net loss attributable to SemiLEDs stockholders decreased to $319 thousand, or $(0.06) per diluted share, compared to a net loss of $559 thousand, or $(0.11) per diluted share in Q2 FY 2024[1][2] - GAAP gross margin for Q3 FY 2024 improved to 41%, compared to 13% in Q2 FY 2024[2] - Operating margin for Q3 FY 2024 was negative 36%, an improvement from negative 94% in Q2 FY 2024[2] - The company expects revenue for Q4 FY 2024 to be approximately $1.0 million, with a variance of +/- 10%[2] Expenses and Cash Flow - Cash and cash equivalents were $1.7 million as of May 31, 2024, slightly up from $1.6 million at the end of Q2 FY 2024[2] - Research and development expenses for Q3 FY 2024 were $320 thousand, compared to $251 thousand in Q2 FY 2024[10] - Total operating expenses for Q3 FY 2024 were $1.016 million, up from $944 thousand in Q2 FY 2024[10] Strategic Initiatives - SemiLEDs has engaged Roth Capital Partners, LLC as a financial advisor to explore potential strategic alternatives[2] Assets - Total assets decreased to $11.511 million as of May 31, 2024, down from $12.019 million at the end of Q2 FY 2024[8]