SemiLEDs Corp

Previous wording

Our ability to grow our revenues generated from the sales of our products and to control our expenses.

Current wording

Our ability to grow our revenues from the sales of our products and to control our expenses.

Previous wording

Adverse macroeconomic developments in those selected markets, including the United States, Japan, Taiwan, Germany, and the 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 India, Japan, the Netherlands and the United States, 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 the United States, Japan, Taiwan, Germany, and the Netherlands. 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 India, Japan, the Netherlands and the United States. 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

In the second quarter of fiscal 2025, we received buy-sell purchase orders; the first set of purchase orders are approximately $13.3 million pursuant to which we will purchase machinery and equipment and then resell the goods to our customer. We have received $7.0 million of deposits, and the balance is due upon the completion of installation and testing of the machinery and equipment at the customer’s site. The revenue relating to these purchase orders is currently expected to be recognized in the second quarter of fiscal 2025, and the associated cost of revenue is estimated to be approximately $12.7 million. However, if shipment is delayed, the revenue could be recognized in the third quarter of fiscal 2025. As a result of these purchase orders and associated uncertainty of the business, we anticipate that our revenue, cost of revenues and inventories over the next several quarters may be varied significantly over recent periods. We cannot assure you when, or if, the revenue will be recognized, when payments will be received, or if we will receive other orders in the future.

Current wording

In the second quarter of fiscal 2025, we received buy-sell purchase orders, pursuant to which we purchased equipment and then resold the goods to our customer. The revenue relating to these purchase orders was $9.4 million in the second quarter of fiscal 2025, and the associated cost of revenue was $8.9 million.

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 United States, Japan, Taiwan, Germany, and the Netherlands. 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, 2024 and 2023, sales to our three largest customers, in the aggregate, accounted for 78% and 72% 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 India, Japan, the Netherlands and the United States. 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 28, 2025, sales to our three largest customers, in the aggregate, accounted for 93% and 90% of our revenues, respectively.

Previous wording

Cash position. Our cash and cash equivalents were $1.2 million and $1.7 million for November 30, 2024 and August 31, 2024, 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 increased to $2.4 million as of February 28, 2025 from $1.6 million as of February 29, 2024. 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 recognizes the amount of revenue when the Company satisfies a performance obligation to which it expects to be entitled for the transfer of promised goods or services to customers. The Company obtains written purchase authorizations from its customers as evidence of an arrangement and these authorizations generally provide for a specified amount of product at a fixed price. Generally, the Company considers delivery to have occurred at the time of shipment as this is generally when title and risk of loss for the products will pass to the customer. The Company provides its customers with limited rights of return for non-conforming shipments and product warranty claims. Based on historical return percentages, which have not been material to date, and other relevant factors, the Company estimates its potential future exposure on recorded product sales, which reduces product revenues in the consolidated statements of operations and reduces accounts receivable in the consolidated balance sheets. The Company also provides standard product warranties on its products, which generally range from three months to two years. Management estimates the Company’s warranty obligations as a percentage of revenues, based on historical knowledge of warranty costs and other relevant factors. To date, the related estimated warranty provisions have been insignificant. Refer to Note 2 to the Unaudited Condensed Consolidated Financial Statements for our revenue recognition policies.

Current wording

Generally, the Company considers delivery to have occurred at the time of shipment as this is generally when title and risk of loss for the products will pass to the customer. The Company provides its customers with limited rights of return for non-conforming shipments and product warranty claims. Based on historical return percentages, which have not been material to date, and other relevant factors, the Company estimates its potential future exposure on recorded product sales, which reduces product revenues in the consolidated statements of operations and reduces accounts receivable in the consolidated balance sheets. The Company also provides standard product warranties on its products, which generally range from three months to two years. Management estimates the Company’s warranty obligations as a percentage of revenues, based on historical knowledge of warranty costs and other relevant factors. To date, the related estimated warranty provisions have been insignificant. Refer to Note 2 to the Unaudited Condensed Consolidated Financial Statements for our revenue recognition policies.

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 $96 thousand and $104 thousand for the three months ended November 30, 2024 and 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 $50 thousand and $77 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively.

Previous wording

The translations from NT dollars to U.S. dollars were made at the exchange rates set forth in the statistical release of the Bank of Taiwan. On November 29, 2024, the exchange rate was 32.47 NT dollars to one U.S. dollar. On January 6, 2024, the exchange rate was 30.87 NT dollars to one U.S. dollar.

Current wording

The translations from NT dollars to U.S. dollars were made at the exchange rates set forth in the statistical release of the Bank of Taiwan. On February 28, 2025, the exchange rate was 31.82 NT dollars to one U.S. dollar. On April 7, 2025, the exchange rate was 33.05 NT dollars to one U.S. dollar.

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 for the three months ended February 28, 2025 primarily include revenues attributable to the buy-sell purchase orders of equipment, and other revenues for the three months ended February 29, 2024 primarily include 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

Revenues attributable to the sales of our LED chips were $65 thousand and $58 thousand, representing 5% and 4% of our revenues for the three months ended November 30, 2024 and 2023, respectively. The increase in 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 $29 thousand and $1 thousand of our revenues for the three months ended February 28, 2025 and February 29, 2024, respectively. The increase in sales of LED chips was primarily due to varying volumes sold for the LED chips.

Previous wording

Revenues attributable to the sales of our LED components were $561 thousand and $1,075 thousand, representing 44% and 65% of our revenues for the three months ended November 30, 2024 and 2023, respectively. The decrease in sales of LED components was primarily due to less volumes sold.

Current wording

Revenues attributable to the sales of our LED components were $682 thousand and $545 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively. The increase in sales of LED components was primarily due to higher volumes sold.

Previous wording

Revenues attributable to the sales of lighting products were $59 thousand and $49 thousand, representing 5% and 3% of our revenues for the three months ended November 30, 2024 and 2023, respectively. The increase in sales of lighting products was primarily due to higher volumes sold.

Current wording

Revenues attributable to the sales of lighting products were $58 thousand and $48 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively. The increase in sales of lighting products was primarily due to higher volumes sold.

Previous wording

Our cost of revenues decreased by 29% from $1.4 million for the three months ended November 30, 2023 to $1.0 million for the three months ended November 30, 2024. The decrease in cost of revenues was primarily due to lower volumes sold for LED components.

Current wording

Our cost of revenues increased from $774 thousand for the three months ended February 28, 2025 to $10 million for the three months ended February 29, 2024. The increase in cost of revenues was due to the buy-sell purchase orders of equipment.

Previous wording

Interest expenses, net. Interest expenses, net primarily consisted of accrued interest 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 the repayment $800,000 of loan principal in fiscal year 2024.

Current wording

Interest expenses, net Interest expenses, net, which primarily consisted of accrued interest payments on loans with our Chairman and Chief Executive Officer and our largest shareholder. The decrease in interest expenses, net was primarily due to the repayment $800,000 of loan principal in fiscal year 2024.

Previous wording

Other income, net. Other income, net which primarily consisted of rental income, was $282 thousand and $259 thousand for the three months ended November 30, 2024 and 2023, respectively. The increase in other income, net was primarily due to the increase of rental income.

Current wording

Other income, net Other income, net which primarily consisted of rental income, decreased from $377 thousand for the three months ended February 29, 2024, to $265 thousand for the three months ended February 28, 2025, primarily due to the decrease of rental income.

Previous wording

Foreign currency transaction (loss) gain, net. We recognized a net foreign currency transaction loss of $102 thousand and a net foreign currency transaction gain of $44 thousand for the three months ended November 30, 2024 and 2023, respectively, primarily due to the impact of fluctuations in the 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 $65 thousand and a net foreign currency transaction loss of $32 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively, primarily due to the impact of fluctuations in the exchange rate of the U.S. dollar against the NT dollar from bank deposits and accounts receivable.

Previous wording

Income Tax Expense. Our effective tax rate is expected to be approximately zero for both fiscal year 2025 and 2024, 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 2025 and 2024, 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

We recognized zero and net income attributable to non-controlling interests of $2 thousand for the three months ended November 30, 2024 and 2023, respectively, which was attributable to the share of the net income of Taiwan Bandaoti Zhaoming Co., Ltd., held by the remaining non-controlling holders. Non-controlling interests represented zero and 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd., as of November 30, 2024 and 2023, respectively.

Current wording

We recognized net income attributable to non-controlling interests of zero and $2 thousand for the three months ended February 28, 2025 and February 29, 2024, respectively, which was attributable to the share of the net income of Taiwan Bandaoti Zhaoming Co., Ltd., held by the remaining non-controlling holders. Non-controlling interests represented zero and 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd., as of February 28, 2025 and February 29, 2024, respectively.

Previous wording

Our gross profit increased from $245 thousand for the three months ended November 30, 2023 to $260 thousand for the three months ended November 30, 2024. Our gross margin percentage was 21% for the three months ended November 30, 2024, as compared to 15% for the three months ended November 30, 2023 as a result of an increase in other revenues.

Current wording

Our gross profit increased from $357 thousand for the six months ended February 29, 2024 to $1.3 million for the six months ended February 28, 2025. Our gross margin percentage was 10% for the six months ended February 28, 2025, as compared to 15% for the six months ended February 29, 2024. The increase in gross profit was primarily due to the buy-sell purchase orders of equipment.

Previous wording

Research and development. Our research and development expenses were $221 thousand and $372 thousand for the three months ended November 30, 2024 and 2023, respectively. The decrease was primarily due to a $101 thousand decrease in materials and supplies and a $41 thousand decrease in payroll expense.

Current wording

Our research and development expenses were $500 thousand and $623 thousand for the six months ended February 28, 2025 and February 29, 2024, respectively. The decrease was primary due to a $73 thousand decrease in payroll expense and a $44 thousand decrease in materials and supplies used in research and development.

Previous wording

Gain on disposals of long-lived assets. We recognized zero and a $50 thousand gain on disposals of long-lived assets for the three months ended November 30, 2024 and 2023, respectively. Due to the excess capacity charges that we have suffered for many 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 during the three months ended November 30, 2023.

Current wording

We recognized zero and a net gain of $50 thousand on the disposal of long-lived assets for the six months ended February 28, 2025 and February 29, 2024, 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 (loss) income from unconsolidated entities. We recognized an investment loss from unconsolidated entities of $3 thousand for the three month ended November 30, 2024 and an investment income from unconsolidated entities of $8 thousand for the three months ended November 30, 2023, primarily due to the loss in equity method investments.

Current wording

Investment (loss) income from unconsolidated entities Investment loss from unconsolidated entities was $13 thousand for the six months ended February 28, 2025, and Investment income from unconsolidated entities as $3 thousand for the six months ended February 29, 2024, respectively, primarily due to the decrease in equity method investments.

Previous wording

As of November 30, 2024 and August 31, 2024, we had cash and cash equivalents of $1.2 million and $1.7 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 28, 2025 and August 31, 2024, we had cash and cash equivalents of $2.4 million and $1.7 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.

Previous wording

Our long-term liabilities consist primarily long-term debt and operating lease liabilities.

Current wording

Our long-term liabilities consist primarily of long-term debt and operating lease liabilities.

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 $3.6 million and $3.7 million as of November 30, 2024 and August 31, 2024, respectively.

Current wording

Our long-term debt, which consisted of NT dollar denominated long-term notes and loans from our Chairman and our largest shareholder, totaled $1.9 million and $3.7 million as of February 28, 2025 and August 31, 2024, respectively.

Previous wording

Our NT dollar denominated long-term notes, totaled $1.2 million and $1.3 million as of November 30, 2024 and August 31, 2024, 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 2.415% 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 2.795% currently) and is available for operating capital. These loans are secured by an $77 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 $1.1 million and $1.3 million as of February 28, 2025 and August 31, 2024, 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 2.415% 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 2.795% currently) and is available for operating capital. These loans are secured by an $76 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, 2024, our outstanding balance on this note payable was approximately $738 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 February 28, 2025, our outstanding balance on this note payable was approximately $662 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, 2024, our outstanding balance on this note payable was approximately $452 thousand.

Current 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 February 28, 2025, our outstanding balance on this note payable was approximately $406 thousand.

Previous wording

Property, plant and equipment pledged as collateral for our notes payable were $1.9 million and $2.0 million as of November 30, 2024 and August 31, 2024, respectively.

Current wording

Property, plant and equipment pledged as collateral for our notes payable were $1.8 million and $2.0 million as of February 28, 2025 and August 31, 2024, respectively.

Previous wording

On January 8, 2019, we 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 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.

Current wording

On January 8, 2019, we entered into a secured loan agreements with Trung Doan, our Chairman and Chief Executive Officer and J.R. Simplot Company, our largest shareholder, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual interest rate of 8% (the “Loan Agreements”). The Loan Agreements are secured by a second priority security interest on our headquarters building. The maturity date of the Loan Agreements were January 14, 2021 and January 22, 2021, respectively. On January 16, 2021, the maturity date of the Loan Agreements was extended with same terms and interest rate for one year to January 15, 2022, and on January 14, 2022, the maturity date of the Loan Agreements 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 the Loan Agreements was further extended with same terms and interest rate for one year to January 15, 2024.

Previous wording

On January 7, 2024, J.R. Simplot Company assigned and transferred all of its right, title and interest in and to the loan agreement to Simplot Taiwan Inc., in accordance with and subject to the terms and conditions of the loan agreement.

Current wording

On January 7, 2024, J.R. Simplot Company and us entered into an assignment agreement (the “Assignment”) pursuant to which J.R. Simplot assigned and transferred all of its right, title and interest in and to the Loan Agreement to Simplot Taiwan Inc., in accordance with and subject to the terms and conditions of the Loan Agreement.

Previous wording

The Fourth Amendment with Simplot Taiwan Inc. (i) extended the maturity date of its loan agreement to January 15, 2025, and (ii) upon mutual agreement of we and Simplot Taiwan Inc., permitted us to repay any principal amount or accrued interest, in an amount not to exceed $400,000, by issuing shares of our common stock in the name of Simplot Taiwan Inc. as partial repayment of the loan agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date. All other terms and conditions of the loan agreement with Simplot Taiwan Inc. remained the same.

Current wording

On January 7, 2024, we entered into the Fourth Amendment to the Loan Agreements with each of Simplot Taiwan Inc. and Trung Doan. The Fourth Amendment to the Loan Agreement with Simplot Taiwan Inc. (i) extended the maturity date to January 15, 2025, and (ii) upon mutual agreement of us and Simplot Taiwan Inc., permitted us to repay any principal amount or accrued interest, in an amount not to exceed $400,000, by issuing shares of our common stock in the name of Simplot Taiwan Inc. as partial repayment of the Loan Agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date. All other terms and conditions of the Loan Agreement with Simplot Taiwan Inc. remained the same. The Fourth Amendment to the Loan Agreement with Trung Doan to amend the loans maturity date with same terms and interest rate to January 15, 2025. All other terms and conditions of the Loan Agreement with Trung Doan remained the same.

Previous wording

On July 3, 2024, we and Trung Doan entered into the Sixth Amendment to the loan agreement (the “Sixth Amendment”). The Sixth Amendment amended the loan agreement to permit, upon the mutual agreement of we and Trung Doan, us to repay a portion of the principal amount or accrued interest under the loan agreement, by issuing shares of our common stock to Trung Doan as partial repayment of the loan agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date. All other terms and conditions of the loan agreement, as amended by the Sixth Amendment, remained the same.

Current wording

On July 3, 2024, we and Trung Doan entered into the Sixth Amendment to the Loan Agreement. The Sixth Amendment to the Loan Agreement amended the Loan Agreement to permit, upon the mutual agreement of us and Trung Doan, us to repay a portion of the principal amount or accrued interest under the Loan Agreement, by issuing shares of our common stock to Trung Doan as partial repayment of the Loan Agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date. All other terms and conditions of the Loan Agreement, as amended by the Sixth Amendment to the Loan Agreement, remained the same. On January 15, 2025, we entered into the Seventh Amendment to the Loan Agreement with Trung Doan and Fifth Amendment to the Loan Agreement with Simplot Taiwan Inc. to extend the maturity date to January 15, 2026. All other terms and conditions of the Loan Agreement remained the same.

Previous wording

On February 9, 2024, we and Trung Doan entered into the Fifth Amendment to the loan agreement (the “Fifth Amendment”). The Fifth Amendment, upon the mutual agreement of we and Trung Doan, permitted us to repay any principal amount or accrued interest, in an amount not to exceed $800,000, by issuing shares of our common stock to Trung Doan as partial repayment of the loan agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date.

Current wording

On February 28, 2025, we and Simplot Taiwan Inc. entered into the Sixth Amendment to the Loan Agreement (the “Amended Loan Agreement”). The Amended Loan Agreement, upon the mutual agreement of us and Simplot Taiwan Inc., permits us to repay any principal amount or accrued interest, in an amount not to exceed $1,200,000, by issuing shares of our common stock to Simplot Taiwan Inc. as partial repayment of the Loan Agreement at a price per share equal to the closing price of our common stock immediately preceding the business day of the payment notice date.

Previous wording

As November 30, 2024 and August 31, 2024, these loans totaled $2.4 million and are secured by a second priority security interest on our headquarters building.

Current wording

As of February 28, 2025 and August 31, 2024, these loans totaled $800 thousand and $2.4 million, respectively. The loans are secured by a second priority security interest on our headquarters building.

Previous wording

On November 25, 2019 and on December 10, 2019, we 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 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 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. All other terms and conditions of the Notes remained the same.

Current wording

On November 25, 2019 and on December 10, 2019, we issued convertible unsecured promissory notes (the “Notes”) to J.R. Simplot Company and Trung Doan (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 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. All other terms and conditions of the Notes remained the same.

Previous wording

We have incurred significant losses since inception, including net losses attributable to SemiLEDs stockholders of $547 thousand and $598 thousand during the three months ended November 30, 2024 and 2023, respectively. Net cash used in operating activities for the three months ended November 30, 2024 was $158 thousand. As of November 30, 2024, we had cash and cash equivalents of $1.2 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 to our stockholders.

Current wording

We have incurred significant losses since inception, including net income attributable to SemiLEDs stockholders of $388 thousand and net loss attributable to SemiLEDs stockholders of $559 thousand during the three months ended February 28, 2025 and February 29, 2024, respectively. Net cash provided by operating activities for the six months ended February 28, 2025 was $1.2 million. As of

Previous wording

We estimate that our cash requirements to service debt and contractual obligations in fiscal 2025 is approximately $3.4 million, which we expect to fund through the issuance of additional equity to repay principal and accrued interest and through loan extensions. Based on our current financial projections and assuming the successful implementation of our liquidity plans, we believe that we will have sufficient sources of liquidity to fund our operations and capital expenditure plans for the next 12 months and beyond. The remaining loans with each of our Chairman and Chief Executive Officer and our largest shareholder are expected to be extended upon maturity or repaid with equity. However, there can be no assurances that our planned activities will be successful in raising additional capital, reducing losses and preserving cash. If we are not able to generate positive cash flows from operations, we may need to consider alternative financing sources and seek additional funds through public or private equity financings or from other sources, or refinance our indebtedness, to support our working capital requirements or for other purposes. There can be no assurance that additional debt or equity financing will be available to us or that, if available, such financing will be available on terms favorable to us.

Current wording

We estimate that our cash requirements to service debt and contractual obligations in fiscal 2025 is approximately $1.9 million, which we expect to fund through the issuance of additional equity to repay principal and accrued interest and through loan extensions. Based on our current financial projections and assuming the successful implementation of our liquidity plans, we believe that we will have sufficient sources of liquidity to fund our operations and capital expenditure plans for the next 12 months and beyond. The remaining loans with each of our Chairman and Chief Executive Officer and our largest shareholder are expected to be extended upon maturity or repaid with equity. However, there can be no assurances that our planned activities will be successful in raising additional capital, reducing losses and preserving cash. If we are not able to generate positive cash flows from operations, we may need to consider alternative financing sources and seek additional funds through public or private equity financings or from other sources, or refinance our indebtedness, to support our working capital requirements or for other purposes. There can be no assurance that additional debt or equity financing will be available to us or that, if available, such financing will be available on terms favorable to us.

Previous wording

Net cash used in financing activities for the three months ended November 30, 2024 and 2023 was $244 thousand and $114 thousand, respectively. The increase in cash flows used in financing activities was primarily due to an increase in acquisition of noncontrolling interest of $132 thousand.

Current wording

Net cash used in financing activities for the six months ended February 28, 2025 and February 29, 2024 was $351 thousand and $231 thousand, respectively. The increase in cash flows used in financing activities was primarily due to an increase in acquisition of noncontrolling interest.