SemiLEDs(LEDS) - 2024 Q3 - Quarterly Report

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$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$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].