SemiLEDs Corp

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 inflation on customer demand.

Current wording

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

Previous wording

We package our LED chips into LED components, which we sell to distributors and a customer base that is heavily concentrated in a few select markets, including Taiwan, the United States, the Netherlands, Taiwan and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets. We sell our LED chips to packagers or to distributors, who in turn sell to packagers. Our lighting products customers are primarily original design manufacturers, or ODMs, of lighting products and the end‑users of lighting devices. We also contract other manufacturers to produce for our sale certain LED products, and for certain aspects of our product fabrication, assembly and packaging processes, based on our design and technology requirements and under our quality control specifications and final inspection process.

Current wording

We package our LED chips into LED components, which we sell to distributors and a customer base that is heavily concentrated in a few select markets, including Taiwan, the United States, the Netherlands, and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets. We sell our LED chips to packagers or to distributors, who in turn sell to packagers. Our lighting products customers are primarily original design manufacturers, or ODMs, of lighting products and the end‑users of lighting devices. We also contract other manufacturers to produce for our sale certain LED products, and for certain aspects of our product fabrication, assembly and packaging processes, based on our design and technology requirements and under our quality control specifications and final inspection process.

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. 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.

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 allowed 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 expired on June 8, 2024. 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 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.

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 nine months ended May 31, 2024, sales to our three largest customers, in the aggregate, accounted for 79% and 65% of our revenues, respectively.

Previous 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.

Current wording

Cash position. Our cash and cash equivalents decreased to $1.7 cash and cash equivalents were million as of May 31, 2024 from $3.0 million as of May 31, 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 allowance for doubtful accounts is based on management’s assessment of the collectability of customer accounts. Management regularly reviews the allowance by considering certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. No bad debt expenses were recognized during the three months ended February 29, 2024 and February 28, 2023.

Current wording

The allowance for doubtful accounts is based on management’s assessment of the collectability of customer accounts. Management regularly reviews the allowance by considering certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. No bad debt expenses were recognized during the three and nine months ended May 31, 2024 and 2023.

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 $77 thousand and $196 thousand for the three months ended February 29, 2024 and February 28, 2023, 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 $119 thousand and $97 thousand for the three months ended May 31, 2024 and 2023, respectively. Inventory write‑downs to estimated net realizable values were $300 thousand and $471 thousand for the nine months ended May 31, 2024 and 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 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.

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 May 31, 2024, the exchange rate was 32.4 NT dollars to one U.S. dollar. On July 1, 2024, the exchange rate was 32.55 NT dollars to one U.S. dollar.

Previous 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.

Current wording

Our revenues decreased by 21% to $1.3 million for the three months ended May 31, 2024 from $1.7 million for the three months ended May 31, 2023. The decrease in revenues was driven primarily by a $560 thousand decrease in sales of LED components, a $2 thousand decrease in sales of LED chips and a $24 thousand decrease in lighting products, offset in part by a $230 thousand increase in other revenues.

Previous 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.

Current wording

Revenues attributable to the sales of our LED chips were $33 thousand and $35 thousand, representing both 2% of our revenues for the three months ended May 31, 2024 and 2023. The decrease was primarily due to fewer LED chips sold.

Previous 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.

Current wording

Revenues attributable to the sales of lighting products represented 5% and 6% of our revenues for the three months ended May 31, 2024 and 2023, respectively. Revenues attributable to the sales of lighting products were lower for the three months ended May 31, 2024 primarily due to decreased demand for LED lighting products.

Previous 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.

Current wording

Revenues attributable to other revenues represented 53% and 28% of our revenues for the three months ended May 31, 2024 and 2023, respectively. The increase in revenues attributable to other revenues was primarily due to the provision of service and the sale of raw materials.

Previous wording

Our gross profit decreased by 57% from $262 thousand for the three months ended February 28, 2023 to $112 thousand for the three months ended February 29, 2024 as a consequence of a decrease in the sales of products with higher margins.

Current wording

Our gross profit increased from $241 thousand for the three months ended May 31, 2023 to $543 thousand for the three months ended May 31, 2024 as a consequence of an increase in the sales of products with higher margins.

Previous 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.

Current wording

Research and development Our research and development expenses were $320 thousand and $372 thousand for the three months ended May 31, 2024 and 2023, respectively. The decrease was primary due to a $38 thousand decrease in payroll and compensation and a $14 thousand decrease in materials and supplies.

Previous 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.

Current wording

Selling, general and administrative Our selling, general and administrative expenses decreased from $850 thousand for the three months ended May 31, 2023 to $696 thousand for the three months ended May 31, 2024. The decrease was mainly attributable to a decrease in payroll and stock-based compensation, professional service fees and various other expenses.

Previous wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities, net increased from zero for the three months ended February 28, 2023 to $5 thousand for the three months ended February 29, 2024, primarily due to the decrease in equity method investments.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities, net increased from zero for the three months ended May 31, 2023 to $3 thousand for the three months ended May 31, 2024, primarily due to the decrease in equity method investments.

Previous 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.

Current wording

Interest expenses, net Interest expenses, net primarily consisted of accrued interest payment on $2.4 million of loans with our Chairman and Chief Executive Officer and our largest shareholder. The decrease in interest expenses, net was primarily due to decrease in interest expense for the three months ended May 31, 2024.

Previous wording

Foreign currency transaction loss, net We recognized a net foreign currency transaction loss of $32 thousand and $7 thousand for the three months ended February 29, 2024 and February 28, 2023, respectively, primarily due to the impact of a lower exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts payables.

Current wording

Foreign currency transaction loss, net We recognized a net foreign currency transaction loss of $59 thousand and $3 thousand for the three months ended May 31, 2024 and 2023, respectively, primarily due to the impact of a lower exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts payables.

Previous 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.

Current wording

Our effective tax rate is expected to be approximately zero for fiscal 2024, consistent with 2023, since Taiwan SemiLEDs has 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 Noncontrolling Interests

Current wording

Net Income Attributable to Noncontrolling Interests

Previous 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.

Current wording

We recognized net income attributable to non-controlling interests of $3 and zero for the three months ended May 31, 2024 and 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., for both May 31, 2024 and 2023.

Previous wording

Six Months Ended February 29, 2024 Compared to the Six Months Ended February 28, 2023

Current wording

Nine months Ended May 31, 2024 Compared to the Nine months Ended May 31, 2023

Previous 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.

Current wording

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

Previous wording

Revenues attributable to the sales of our LED chips represented 3% of our revenues for six months ended February 29, 2024 and February 28, 2023. The decrease in revenues attributable to sales of LED chips was a result of a decrease in the volume of LED chips sold.

Current wording

Revenues attributable to the sales of our LED chips were $93 thousand and $106 thousand, representing 2% of our revenues for both nine months ended May 31, 2024 and 2023, respectively. The slight decrease in sales of LED chips was a result of a decrease in the volume of LED chips sold.

Previous 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.

Current wording

Revenues attributable to the sales of our LED components were $2.1 million and $2.3 million, representing 56% and 51% of our revenues for the nine months ended May 31, 2024 and 2023, respectively. The decrease in sales of LED components was primarily due to less volumes sold.

Previous wording

Revenues attributable to the sales of lighting products were represented 4% and 7% of our revenues for the six months ended February 29, 2024 and February 28, 2023, respectively. Revenues attributable to the sales of lighting products were lower for the six months ended February 29, 2024 primarily due to less demand for the lighting products sold.

Current wording

Revenues attributable to the sales of lighting products were $169 thousand and $307 thousand, representing 4% and 7% of our revenues for nine months ended May 31, 2024 and 2023, respectively. Revenues attributable to the sales of lighting products were $138 thousand lower for the nine months ended May 31, 2023 primarily due to less demand for the lighting products sold.

Previous wording

Revenues attributable to other operating revenues represented 30% and 47% of our revenues for the six 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.

Current wording

Revenues attributable to other revenues represented 38% and 40% of our revenues for the nine months ended May 31, 2024 and 2023, respectively. The decrease in revenues attributable to other revenues was primarily due to reductions in the provision of service and the sale of raw materials.

Previous wording

Our cost of revenues decreased by 13% from $890 thousand for the three months ended February 28, 2023 to $774 thousand for the three months ended February 29, 2024. The decrease in cost of revenues was due to the decrease in the volume of products sold.

Current wording

Our cost of revenues decreased by 17% from $3.6 million for the nine months ended May 31, 2023 to $3 million for the nine months ended May 31, 2024. The decrease in cost of revenues was primarily due to the decrease in the volume of products sold.

Previous wording

Our gross profit decreased from $725 thousand for the six months ended February 28, 2023 to $357 thousand for the six months ended February 29, 2024. Our gross margin percentage was 15% for the six months ended February 29, 2024, as compared to 25% for the six months ended February 28, 2023 as a consequence of a decrease in the sales of products with higher margins.

Current wording

Our gross profit decreased from $966 thousand for the nine months ended May 31, 2023 to $900 thousand for the nine months ended May 31, 2024. Our gross margin percentage was 23% for the nine months ended May 31, 2024, as compared to 21% for the nine months ended May 31, 2023 as a consequence of an increase in the sales of products with higher margins.

Previous wording

Our research and development expenses were $623 thousand and $660 thousand for the six months ended February 29, 2024 and February 28, 2023, respectively. The decrease was primary due to a $35 thousand decrease in payroll expense as a result of a headcount reduction completed at our subsidiary, TSLC Corporation.

Current wording

Research and development Our research and development expenses were $943 thousand and $1.0 million for the nine months ended May 31, 2024 and 2023, respectively. The decrease was primary due to a $74 thousand decrease in payroll and compensation and a $14 thousand decrease in various other expenses.

Previous 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.

Current wording

We recognized a net gain of $50 thousand and zero on the disposal of long-lived assets for the nine months ended May 31, 2024 and 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

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. The slight increase in interest expense, net was primarily due to lower interest income for the six months ended February 29, 2024.

Current wording

Interest expenses, net Interest expenses, net primarily consisted of accrued interest payments 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. The decrease in interest expense, net was primarily due to lower outstanding debt for the nine months ended May 31, 2024.

Previous wording

Other income, net Other income, net increased from $471 thousand for the six months ended February 28, 2023, to $636 thousand for the six months ended February 29, 2024, primarily due to an increase in rental income and revenue under the Patent Cross-License Agreement with CrayoNano AS.

Current wording

Other income, net Other income, net increased from $766 thousand for the nine months ended May 31, 2023, to $913 thousand for the nine months ended May 31, 2024, primarily due to an increase in rental income and revenue under the Patent Cross-License Agreement with CrayoNano AS.

Previous 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.

Current wording

Foreign currency transaction loss, net We recognized a net foreign currency transaction loss of $47 thousand and $20 thousand for the nine months ended May 31, 2024 and 2023, respectively, primarily due to the impact of a lower exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts payables.

Previous wording

Our effective tax rate is expected to be approximately zero for fiscal 2024 and was zero for fiscal 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, consistent with 2023, since Taiwan SemiLEDs has 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 Noncontrolling Interests

Current wording

Net (Loss) Income Attributable to Noncontrolling Interests

Previous wording

We recognized net income of attributable to non-controlling interests of $4 thousand and a net loss of $1 thousand for the six 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.

Current wording

We recognized net income attributable to non-controlling interests of $7 thousand and net loss of $1 thousand for the nine months ended May 31, 2024 and 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., for both May 31, 2024 and 2023.

Previous 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.

Current wording

As of May 31, 2024 and August 31, 2023, we had cash and cash equivalents of $1.7 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 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.

Current wording

Our NT dollar denominated long-term notes, totaled $1.4 million as of May 31, 2024 and $1.8 million as 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 was used for operating capital. These loans are secured by a $77 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 $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.

Current 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 May 31, 2024, our outstanding balance on this note payable was approximately $879 thousand.