SemiLEDs Corp

Previous wording

Our ability to regain compliance with the continued listing requirements to avoid our stock being delisted from the NASDAQ Capital Market.

Current wording

Our ability to maintain compliance with the continued listing requirements to avoid our stock being delisted from the Nasdaq Capital Market.

Previous wording

Adverse macroeconomic developments in those selected markets, including the United States, Japan, Taiwan and Netherlands, where our revenues are concentrated, including supply chain delays and the impact of the COVID-19 pandemic and inflation on customer demand.

Current wording

Adverse macroeconomic developments in those selected markets, including the United States, Japan, Taiwan and Netherlands, where our revenues are concentrated, including supply chain delays and the impact of inflation on customer demand.

Previous wording

Our ability to raise additional funding, sell additional equity securities and improve our liquidity. We need to improve our liquidity, access alternative sources of funding and obtain additional equity capital or debt when necessary for our operations. In July 2021, we established an at-the-market equity program (“ATM”) that allows us to sell up to $20 million of shares of our common stock from time to time. During fiscal 2023, we sold zero shares of our common stock pursuant to the ATM program. We may not be able to obtain such debt funding or sell equity securities on terms that are favorable to us, or at all. The raising of additional debt funding by us, if required and available, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on our assets, that would restrict our operations. The sale of additional equity securities, if required and available, could result in dilution to our stockholders.

Current wording

Our ability to raise additional funding, sell additional equity securities and improve our liquidity. We need to improve our liquidity, access alternative sources of funding and obtain additional equity capital or debt when necessary for our operations. In July 2021, we established an at-the-market equity program (“ATM”) that allows us to sell up to $20 million of shares of our common stock from time to time. In fiscal 2024 to date, we sold zero shares of our common stock pursuant to the ATM program. The ATM program expires on June 8, 2024 unless extended. We may not be able to obtain such debt funding or sell equity securities on terms that are favorable to us, or at all, particularly if our common stock is delisted from the Nasdaq Capital Market. The raising of additional debt funding by us, if required and available, would result in increased debt service obligations and could result in additional operating and financing covenants, or liens on our assets, that would restrict our operations. The sale of additional equity securities, if required and available, could result in dilution to our stockholders.

Previous wording

General economic conditions and geographic concentration. Many countries including the United States and the European Union (the “E.U.”) members have instituted, or have announced plans to institute, government regulations and programs designed to encourage or mandate increased energy efficiency in lighting. These actions include in certain cases banning the sale after specified dates of certain forms of incandescent lighting, which are advancing the adoption of more energy efficient lighting solutions such as LEDs. When the global economy slows or a financial crisis occurs, consumer and government confidence declines, with levels of government grants and subsidies for LED adoption and consumer spending likely to be adversely impacted. Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States, Germany, and Japan. Given that we are operating in a rapidly changing industry, our sales in specific markets may fluctuate from quarter to quarter. Therefore, our financial results will be impacted by general economic and political conditions in such markets. For example, the aggressive support by the Chinese government for the LED industry through significant government incentives and subsidies to encourage the use of LED lighting and to establish the LED‑sector companies has resulted in production overcapacity in the market and intense competition. Furthermore, due to Chinese package manufacturers increasing usage of domestic LED chips, prices are increasingly competitive, leading to Chinese manufacturers growing market share in the global LED industry. In addition, we have historically derived a significant portion of our revenues from a limited number of customers. Some of our largest customers and what we produce/have produced for them have changed from quarter to quarter primarily as a result of the timing of discrete, large project‑based purchases and broadening customer base, among other things. For the three months ended November 30, 2023 and 2022, sales to our three largest customers, in the aggregate, accounted for 72% and 65% of our revenues, respectively.

Current wording

General economic conditions and geographic concentration. Many countries including the United States and the European Union (the “E.U.”) members have instituted, or have announced plans to institute, government regulations and programs designed to encourage or mandate increased energy efficiency in lighting. These actions include in certain cases banning the sale after specified dates of certain forms of incandescent lighting, which are advancing the adoption of more energy efficient lighting solutions such as LEDs. When the global economy slows or a financial crisis occurs, consumer and government confidence declines, with levels of government grants and subsidies for LED adoption and consumer spending likely to be adversely impacted. Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States, Germany, and Japan. Given that we are operating in a rapidly changing industry, our sales in specific markets may fluctuate from quarter to quarter. Therefore, our financial results will be impacted by general economic and political conditions in such markets. For example, the aggressive support by the Chinese government for the LED industry through significant government incentives and subsidies to encourage the use of LED lighting and to establish the LED‑sector companies has resulted in production overcapacity in the market and intense competition. Furthermore, due to Chinese package manufacturers increasing usage of domestic LED chips, prices are increasingly competitive, leading to Chinese manufacturers growing market share in the global LED industry. In addition, we have historically derived a significant portion of our revenues from a limited number of customers. Some of our largest customers and what we produce/have produced for them have changed from quarter to quarter primarily as a result of the timing of discrete, large project‑based purchases and broadening customer base, among other things. For the three and six months ended February 29, 2024, sales to our three largest customers, in the aggregate, accounted for 71% and 63% of our revenues, respectively.

Previous wording

Cash position. Our cash and cash equivalents were $2.3 million and $2.6 million for November 30, 2023 and August 31, 2023, respectively. We have implemented actions to accelerate operating cost reductions and improve operational efficiencies. The plan is further enhanced through the fabless business model in which we implemented certain workforce reductions and are exploring the opportunities to sell certain equipment related to the manufacturing of vertical LED chips, in order to reduce the idle capacity charges and minimize our research and development activities associated with chips manufacturing operation. Based on our current financial projections and assuming our outstanding notes are converted or extended, we believe that we will have sufficient sources of liquidity to fund our operations and capital expenditure plans for the next 12 months.

Current wording

Cash position. Our cash and cash equivalents decreased to $1.6 million as of February 29, 2024 from $3.9 million as of February 28, 2023. We have implemented actions to accelerate operating cost reductions and improve operational efficiencies. The plan is further enhanced through the fabless business model in which we implemented certain workforce reductions and are exploring the opportunities to sell certain equipment related to the manufacturing of vertical LED chips, in order to reduce the idle capacity charges and minimize our research and development activities associated with chips manufacturing operation. Based on our current financial projections and assuming our outstanding notes are converted or extended, we believe that we will have sufficient sources of liquidity to fund our operations and capital expenditure plans for the next 12 months.

Previous wording

The Company writes down excess and obsolete inventory to its estimated net realizable value. The net realized value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realized value is based on current market conditions and historical experience with product sales of similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value. For finished goods and work in process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write downs are included in cost of revenues in the consolidated statements of operations. Once written down, inventories are carried at this lower cost basis until sold or scrapped. Inventory write‑downs to estimated net realizable values were $104 thousand and $178 thousand for the three months ended November 30, 2023 and 2022, respectively.

Current wording

The Company writes down excess and obsolete inventory to its estimated net realizable value. The net realized value of inventories is the estimated selling price in the ordinary course of business less the estimated costs of completion and disposal. The estimation of net realized value is based on current market conditions and historical experience with product sales of similar nature. Changes in market conditions may have a material impact on the estimation of the net realizable value. For finished goods and work in process, if the estimated net realizable value for an inventory item, which is the estimated selling price in the ordinary course of business, less reasonably predicable costs to completion and disposal, is lower than its cost, the specific inventory item is written down to its estimated net realizable value. Net realizable value for raw materials is based on replacement cost. Provisions for inventory write downs are included in cost of revenues in the consolidated statements of operations. Once written down, inventories are carried at this lower cost basis until sold or scrapped. Inventory write‑downs to estimated net realizable values were $77 thousand and $196 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively.

Previous wording

The translations from NT dollars to U.S. dollars were made at the exchange rates as set forth in the statistical release of the Bank of Taiwan. On November 30, 2023, the exchange rate was 31.255 NT dollars to one U.S. dollar. On January 4, 2024, the exchange rate was 30.99 NT dollars to one U.S. dollar.

Current wording

The translations from NT dollars to U.S. dollars were made at the exchange rates as set forth in the statistical release of the Bank of Taiwan. On February 29, 2024, the exchange rate was 31.58 NT dollars to one U.S. dollar. On April 3, 2024, the exchange rate was 32.06 NT dollars to one U.S. dollar.

Previous wording

Our revenues decreased by 3% to $1.6 million for the three months ended November 30, 2023 from $1.7 million for the three months ended November 30, 2022. The decrease in revenues was caused primarily by a $106 thousand decrease in lighting products, a $188 thousand decrease in other operating revenues, offset by a $240 thousand increase in LED components and a $9 thousand increase in LED chips.

Current wording

Our revenues decreased by 23% to $886 thousand for the three months ended February 29, 2024 from $1.2 million for the three months ended February 28, 2023. The decrease in revenues was driven primarily by a $402 thousand decrease in sales of other revenues and a $21 thousand decrease in sales of LED chips and a $8 thousand decrease in lighting products, offset by a $165 thousand increase in LED components.

Previous wording

Revenues attributable to the sales of our LED chips represented 4% and 3% of our revenues for the three months ended November 30, 2023 and 2022, respectively. The increase in revenues attributable to sales of LED chips was primarily due to varying volumes sold for the LED chips.

Current wording

Revenues attributable to the sales of our LED chips were $1 thousand and $22 thousand, representing 0.1% and 2% of our revenues for each of the three months ended February 29, 2024 and February 28, 2023, respectively. The decrease was primarily due to varying volumes sold for the LED chips.

Previous wording

Revenues attributable to the sales of our LED components represented 65% and 49% of our revenues for the three months ended November 30, 2023 and 2022, respectively. The increase in revenues attributable to sales of LED components was primarily due to higher volumes sold.

Current wording

Revenues attributable to the sales of our LED components represented 62% and 33% of our revenues for the three months ended February 29, 2024 and February 28, 2023, respectively. The increase in revenues attributable to sales of LED components was primarily due to higher volumes sold.

Previous wording

Revenues attributable to the sales of lighting products represented 3% and 9% of our revenues for the three months ended November 30, 2023 and 2022, respectively. Revenues attributable to the sales of lighting products were lower for the three months ended November 30, 2023 primarily due to less demand for the lighting products sold.

Current wording

Revenues attributable to the sales of lighting products represented 5% of our revenues for the three months ended February 29, 2024 and February 28, 2023. Revenues attributable to the sales of lighting products were lower for the three months ended February 29, 2024 primarily due to less demand for the LED lighting products.

Previous wording

Revenues attributable to other operating revenues represented 28% and 39% of our revenues for the three months ended November 30, 2023 and 2022, respectively. The decrease in other revenues was primarily due to the provision of service and the sale of raw materials.

Current wording

Revenues attributable to other operating revenues represented 33% and 60% of our revenues for the three months ended February 29, 2024 and February 28, 2023, respectively. The decrease in revenues attributable to other operating revenues was primarily due to the provision of service and the sale of raw materials.

Previous wording

Research and development. Our research and development expenses were $372 thousand and $365 thousand for the three months ended November 30, 2023 and 2022, respectively. The increase was primarily due to a $31 thousand increase in materials and supplies used in research and development, offset partially by a $21 thousand decrease in payroll expense.

Current wording

Our research and development expenses decrease from $295 thousand for the three months ended February 28, 2023 to $251 thousand for the three months ended February 29, 2024. The decrease was primarily due to a $36 thousand decrease in payroll expense and a $9 thousand decrease in materials and supplies used in research and development.

Previous wording

Selling, general and administrative. Our selling, general and administrative expenses decreased from $752 thousand for the three months ended November 30, 2022 to $742 thousand for the three months ended November 30, 2023. The decrease was mainly attributable to decreases in RSU expenses and professional service expenses.

Current wording

Our selling, general and administrative expenses increased from $669 thousand for the three months ended February 28, 2023 to $693 thousand for the three months ended February 29, 2024. The increase was mainly attributable to increases in insurance expense, professional service fees and in various other expenses.

Previous wording

Interest expenses, net. Interest expenses, net which primarily consisted of accrued interest on convertible notes, NT dollar denominated long-term notes and $3.2 million of loans with our Chairman and Chief Executive Officer and our largest shareholder. The increase in interest expenses, net was insignificant.

Current wording

Interest expenses, net Interest expenses, net, which primarily consisted of accrued interest payment on convertible notes, NT dollar denominated long-term notes and $2.4 million of loans with our Chairman and Chief Executive Officer and our largest shareholder, remained flat.

Previous wording

Other income, net. Other income, net increased from $242 thousand for the three months ended November 30, 2022 to $259 thousand for the three months ended November 30, 2023 was primarily due to an increase in rental income.

Current wording

Other income, net Other income, net increase from $229 thousand for the three months ended February 28, 2023, to $377 thousand for the three months ended February 29, 2024, primarily due to an increase in rental income and revenue under the Patent Cross-License Agreement with CrayoNano AS.

Previous wording

Income Tax Expense. Our effective tax rate is expected to be approximately zero for fiscal 2024 and 2023, since Taiwan SemiLEDs incurred losses, and because we provided a full valuation allowance on all deferred tax assets, which consisted primarily of net operating loss carryforwards and foreign investment loss.

Current wording

Our effective tax rate is expected to be approximately zero for fiscal 2024 and 2023, since Taiwan SemiLEDs incurred losses, and because we provided a full valuation allowance on all deferred tax assets, which consisted primarily of net operating loss carryforwards and foreign investment loss.

Previous wording

Net Income (Loss) Attributable to Non-controlling Interests

Current wording

Net Income (Loss) Attributable to Noncontrolling Interests

Previous wording

We recognized net income attributable to non-controlling interests of $2 thousand and a net loss of $3 thousand for the three months ended November 30, 2023 and 2022, respectively, which was attributable to the share of the net losses of Taiwan Bandaoti Zhaoming Co., Ltd., held by the remaining non-controlling holders. Non-controlling interests represented 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd., as of November 30, 2023 and 2022.

Current wording

We recognized net income attributable to non-controlling interests of $2 thousand and a net loss of $4 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively, which was attributable to the share of the net gain (loss) of Taiwan Bandaoti Zhaoming Co., Ltd held by the remaining non-controlling holders. Non-controlling interests represented 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd., as of February 29, 2024 and February 28, 2023.

Previous wording

(1)Other includes primarily revenues attributable to the sale of epitaxial wafers, scraps and raw materials and the provision of services and a joint development project with CrayoNano AS.

Current wording

(1) Other revenues includes primarily revenues attributable to the sale of epitaxial wafers, scraps and raw materials and the provision of services and a joint development project with CrayoNano AS.

Previous wording

Gain on disposals of long-lived assets. Our gain on disposals of long-lived assets increased from zero for the three months ended November 30, 2022 to $50 thousand for the three months ended November 30, 2023. Due to the excess capacity charges that we have suffered for a few years, considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of certain of our idle equipment.

Current wording

We recognized a net gain of $50 thousand and zero on the disposal of long-lived assets for the six months ended February 29, 2024 and February 28, 2023, respectively. Due to the excess capacity charges that we have suffered for the last few years, and considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of certain of our idle equipment.

Previous wording

Investment income Investment income, net increased from zero for the three months ended November 30, 2022 to $8 thousand for the three months ended November 30, 2023, primarily due to the increase in equity method investments.

Current wording

Investment income Investment income, net increased from zero for the six months ended February 28, 2023 to $3 thousand for the six months ended February 29, 2024, primarily due to the increase in equity method investments.

Previous wording

Foreign currency transaction loss, net. We recognized a net foreign currency transaction gain of $44 thousand and a net foreign currency transaction loss of $10 thousand for the three months ended November 30, 2023 and 2022, respectively, primarily due to the impact of a higher exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts receivable.

Current wording

Foreign currency transaction gain (loss), net We recognized a net foreign currency transaction gain of $12 thousand and a net foreign currency transaction loss of $17 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively, primarily due to the impact of a higher exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts payable.

Previous wording

We have several operating leases with third parties, primarily for land, plant and office spaces in Taiwan, including cancellable and noncancelable leases that expire at various dates between December 2024 and December 2040. See Note 5, "Commitments and Contingencies" in the notes to our unaudited consolidated financial statements in this Form 10-Q.

Current wording

We have several operating leases with third parties, primarily for land, plant and office spaces in Taiwan, including cancellable and noncancelable leases that expire at various dates between December 2024 and December 2040. See Note 5, “Commitments and Contingencies” in the notes to our unaudited consolidated financial statements in this Quarterly Report.

Previous wording

As of November 30, 2023 and August 31, 2023, we had cash and cash equivalents of $2.3 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits and/or money market funds. We require cash to fund our operating expenses, working capital requirements and service our debts, including principal and interest.

Current wording

As of February 29, 2024 and August 31, 2023, we had cash and cash equivalents of $1.6 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits and/or money market funds.

Previous wording

Our long-term debt, which consisted of NT dollar denominated long-term notes, convertible unsecured promissory notes, and loans from our Chairman and our largest shareholder, totaled $6.3 million and $6.4 million as of November 30, 2023 and August 31, 2023, respectively.

Current wording

Our long-term debt, which consisted of NT dollar denominated long-term notes, convertible unsecured promissory notes, and loans from our Chairman and our largest shareholder, totaled $4.0 million and $6.4 million as of February 29, 2024 and August 31, 2023, respectively. In January 2024, the convertible unsecured promissory notes were all converted.

Previous wording

Our NT dollar denominated long-term notes, totaled $1.7 million and $1.8 million as of November 30, 2023 and August 31, 2023, respectively. These long-term notes consisted of two loans which we entered into on July 5, 2019, with aggregate amounts of $3.2 million (NT$100 million). The first loan originally for $2.0 million (NT$62 million) has an annual floating interest rate equal to the NTD base lending rate plus 0.64% (or 2.29% currently), and was exclusively used to repay the existing loans. The second loan originally for $1.2 million (NT$38 million) has an annual floating interest rate equal to the NTD base lending rate plus 1.02% (or 2.67% currently) and is available for operating capital. These loans are secured by an $80 thousand (NT$2.5 million) security deposit and a first priority security interest on the Company’s headquarters building.

Current wording

Our NT dollar denominated long-term notes, totaled $2.4 million of February 29, 2024 and $3.2 million of August 31, 2023. These long-term notes consisted of two loans which we entered into on July 5, 2019, with aggregate amounts of $3.2 million (NT$100 million). The first loan originally for $2.0 million (NT$62 million) has an annual floating interest rate equal to the NTD base lending rate plus 0.64% (or 2.29% currently), and was exclusively used to repay the existing loans. The second loan originally for $1.2 million (NT$38 million) has an annual floating interest rate equal to the NTD base lending rate plus 1.02% (or 2.67% currently) and is available for operating capital. These loans are secured by an $79 thousand (NT$2.5 million) security deposit and a first priority security interest on the Company’s headquarters building.

Previous wording

Starting from May 2021, the first note payable requires monthly payments of principal in the amount of $23 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of November 30, 2023, our outstanding balance on this note payable was approximately $1.1 million.

Current wording

Starting from May 2021, the first note payable requires monthly payments of principal in the amount of $24 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of February 29, 2024, our outstanding balance on this note payable was approximately $973 thousand.

Previous wording

Starting from May 2021, the second note payable requires monthly payments of principal in the amount of $14 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of November 30, 2023, our outstanding balance on this note payable was approximately $0.6 million.

Current wording

Starting from May 2021, the second note payable requires monthly payments of principal in the amount of $15 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of February 29, 2024, our outstanding balance on this note payable was approximately $596 thousand.

Previous wording

Property, plant and equipment pledged as collateral for our notes payable were $2.3 million as of both November 30, 2023 and August 31, 2023.

Current wording

Property, plant and equipment pledged as collateral for our notes payable were $2.2 million and $2.3 million as of February 29, 2024 and August 31, 2023, respectively.

Previous wording

On January 8, 2019, we entered into loan agreements with each of our Chairman and Chief Executive Officer and our largest shareholder, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual interest rate of 8%. All proceeds of the loans were exclusively used to return the deposit to Formosa Epitaxy Incorporation in connection with the proposed sale of our headquarters building pursuant to the agreement dated December 15, 2015. We were initially required to repay the loans of $1.5 million on January 14, 2021 and $1.7 million on January 22, 2021, respectively. On January 16, 2021, the maturity date of these loans was extended with same terms and interest rate for one year to January 15, 2022, and on January 14, 2022, the maturity date of these loans was extended again with same terms and interest rate for one more year to January 15, 2023. On January 13, 2023, the maturity date of these loans was further extended with same terms and interest rate for one year to January 15, 2024. As of November 30, 2023 and August 31, 2023, these loans totaled $3.2 million, respectively. The loans are secured by a second priority security interest on our headquarters.

Current wording

On January 8, 2019, the Company entered into loan agreements with each of the Chairman and Chief Executive Officer and the largest shareholder of the Company, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual interest rate of 8%. All proceeds of the loans were exclusively used to return the deposit to Formosa Epitaxy Incorporation in connection with the proposed sale of the Company's headquarters building pursuant to the agreement dated December 15, 2015. The Company were initially required to repay the loans of $1.5 million on January 14, 2021 and $1.7 million on January 22, 2021, respectively. On January 16, 2021, the maturity date of these loans was extended with same terms and interest rate for one year to January 15, 2022, and on January 14, 2022, the maturity date of these loans was extended again with same terms and interest rate for one more year to January 15, 2023. On January 13, 2023, the maturity date of these loans was further extended with same terms and interest rate for one year to January 15, 2024.

Previous wording

On November 25, 2019 and on December 10, 2019, we issued the Notes to J.R. Simplot Company, our largest shareholder, and Trung Doan, our Chairman and Chief Executive Officer, (together, the “Holders”) with a principal sum of $1.5 million and $500 thousand, respectively, and an annual interest rate of 3.5%. Principal and accrued interest is due on demand by the Holders on and at any time after May 30, 2021. On February 7, 2020, J.R. Simplot Company assigned all of its right, title and interest in the Notes to Simplot Taiwan Inc. The outstanding principal and unpaid accrued interest of the Notes may be converted into shares of our common stock at a conversion price of $3.00 per share, at the option of the Holders any time from the date of the Notes. On May 25, 2020, each of the Holders converted $300,000 of the Notes into 100,000 shares of our common stock. On May 26, 2021, the Notes were extended with the same terms and interest rate for one year and a maturity date of May 30, 2022. On May 26, 2022, the Notes were second extended with the same terms and interest rate for one year and a maturity date of May 30, 2023. On June 6, 2023, we entered into the Third Amendment to the Convertible Unsecured Promissory Notes ("Third Amendments") to amend the Notes to (i) extend the maturity date from May 30, 2023 to May 30, 2024, and (ii) change the conversion price from $3.00 to $2.046 per share. The change in conversion price is subject to stockholder approval. All other terms and conditions of the Notes remain the same. As of November 30, 2023 and August 31, 2023, the outstanding principal of these notes totaled $1.4 million.

Current wording

On November 25, 2019 and on December 10, 2019, the Company issued convertible unsecured promissory notes (the “Notes”) to J.R. Simplot Company, its largest shareholder, and Trung Doan, our Chairman and Chief Executive Officer, (together, the “Holders”) with a principal sum of $1.5 million and $500 thousand, respectively, and an annual interest rate of 3.5%. Principal and accrued interest is due on demand by the Holders on and at any time after May 30, 2021. On February 7, 2020, J.R. Simplot Company assigned all of its right, title and interest in the Notes to Simplot Taiwan Inc. The outstanding principal and unpaid accrued interest of the Notes may be converted into shares of the Company’s common stock at a conversion price of $3.00 per share, at the option of the Holders any time from the date of the Notes. On May 25, 2020, each of the Holders converted $300,000 of the Notes into 100,000 shares of the Company’s common stock. On May 26, 2021, the Notes were extended with the same terms and interest rate for one year and a maturity date of May 30, 2022. On May 26, 2022, the Notes were second extended with the same terms and interest rate for one year and a maturity date of May 30, 2023. On June 6, 2023, the Company entered into the Third Amendment to the Notes (the “Third Amendments”) to amend the Notes to (i) extend the maturity date from May 30, 2023 to May 30, 2024, and (ii) change the conversion price from $3.00 to $2.046 per share. The change in conversion price is subject to stockholder approval. All other terms and conditions of the Notes remain the same.

Previous wording

We have incurred significant losses since inception, including net losses attributable to SemiLEDs stockholders of $598 thousand and $512 thousand during the three months ended November 30, 2023 and 2022, respectively. Net cash used in operating activities for the three months ended November 30, 2023 was $79 thousand. As of November 30, 2023, we had cash and cash equivalents of $2.3 million. We have undertaken actions to decrease losses incurred and implemented cost reduction programs in an effort to transform the Company into a profitable operation. In addition, we are planning to issue additional equity.

Current wording

We have incurred significant losses since inception, including net losses attributable to SemiLEDs stockholders of $559 thousand and $541 thousand during the three months ended February 29, 2024 and February 28, 2023, respectively. Net cash used in operating activities for the six months ended February 29, 2024 was $679 thousand. As of February 29, 2024, we had cash and cash equivalents of $1.6 million. We have undertaken actions to decrease losses incurred and implemented cost reduction programs in an effort to transform the Company into a profitable operation. In addition, we are planning to issue additional equity.

Previous wording

On July 6, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”). In accordance with the terms of the Sales Agreement, we may offer and sell from time to time through the Agent our common stock having an aggregate offering price of up to $20,000,000 (the “Placement Shares”). Sales of the Placement Shares will be made on Nasdaq at market prices by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, or the Securities Act. We agreed to pay a commission to the Agent of 3.0% of the gross proceeds of the sale of the Placement Shares sold under the Agreement and reimburse the Agent for certain expenses. We did not sell any shares of common stock under our ATM program in fiscal year 2023 and in the first quarter of fiscal 2024.

Current wording

On July 6, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”). In accordance with the terms of the Sales Agreement, we may offer and sell from time to time through the Agent our common stock having an aggregate offering price of up to $20,000,000 (the “Placement Shares”). Sales of the Placement Shares will be made on Nasdaq at market prices by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended, or the Securities Act. We agreed to pay a commission to the Agent of 3.0% of the gross proceeds of the sale of the Placement Shares sold under the Agreement and reimburse the Agent for certain expenses. We did not sell any shares of common stock under our ATM program in fiscal year 2023 and in the second quarter of fiscal 2024.

Previous wording

Cash Flows (Used In) Provided by Operating Activities

Current wording

Cash Flows Used In Operating Activities

Previous wording

Net cash used in financing activities for the three months ended November 30, 2023 and 2022 was $114 thousand and $115 thousand, respectively, which amounts were primarily for the repayment of long-term debt.

Current wording

Net cash used in financing activities for the six months ended February 29, 2024 and February 28, 2023 was $231 thousand and $240 thousand, respectively. The decrease was primary attributable to the repayments of long-term debt.

Previous wording

We had capital expenditures of $50 and $63 thousand for the three months ended November 30, 2023 and 2022, respectively. Our capital expenditures consisted primarily of the purchases of machinery and equipment, construction in progress, prepayments for our manufacturing facilities and prepayments for equipment purchases. We expect to continue investing in capital expenditures in the future as we expand our business operations and invest in such expansion of our production capacity as we deem appropriate under market conditions and customer demand. However, in response to controlling capital costs and maintaining financial flexibility, our management continues to monitor prices and, consistent with its existing contractual commitments, may decrease its activity level and capital expenditures as appropriate.

Current wording

We had capital expenditures of $69 thousand and $83 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively. Our capital expenditures consisted primarily of the purchases of machinery and equipment, construction in progress, prepayments for our manufacturing facilities and prepayments for equipment purchases. We expect to continue investing in capital expenditures in the future as we expand our business operations and invest in such expansion of our production capacity as we deem appropriate under market conditions and customer demand. However, in response to controlling capital costs and maintaining financial flexibility, our management continues to monitor prices and, consistent with its existing contractual commitments, may decrease its activity level and capital expenditures as appropriate.