SemiLEDs(LEDS) - 2025 Q3 - Quarterly Report

Part I. Financial Information This section details the company's financial performance, position, cash flows, and related disclosures, including management's analysis and internal controls Financial Statements 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 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 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 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] Notes to Unaudited Condensed Consolidated Financial Statements 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] - Historical operating losses raise substantial doubt about the company's ability to continue as a going concern, despite management's liquidity plan[30][31] - 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] - 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] Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 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] 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] Quantitative and Qualitative Disclosures About Market Risk The company has indicated that this section is not applicable - This section is not applicable[190] Controls and Procedures 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] - No material changes in internal control over financial reporting occurred during the quarter ended May 31, 2025[195] Part II. Other Information This section addresses legal proceedings, key risk factors, and other miscellaneous disclosures including equity sales and defaults Legal Proceedings 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] Risk Factors 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][202][203] - Significant revenue from recent buy-sell purchase orders introduces uncertainty and potential volatility to future revenues, costs, and other financial metrics[205][206] - 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] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds during the period - None reported[209] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None reported[211] Mine Safety Disclosures This section is not applicable to the company - This section is not applicable[212] Other Information 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]