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 remain in compliance with the continued listing requirements to avoid our stock being delisted from the Nasdaq Capital Market.

Previous wording

Our ability to develop and execute upon a new strategy to exploit the China and India market.

Current wording

Our ability to develop and execute upon a new strategy to exploit the China and India markets.

Previous wording

The ability of SemiLEDs Optoelectronics Co., Ltd., or Taiwan SemiLEDs, to make dividends and other payments to SemiLEDs Corporation.

Current wording

The ability of Taiwan Banadaoti Zhaoming Co., Ltd. to make dividends and other payments to SemiLEDs Corporation.

Previous wording

Our ability to obtain necessary regulatory approvals to make further investments in Taiwan SemiLEDs.

Current wording

Our ability to obtain necessary regulatory approvals to make further investments in Taiwan Banadaoti Zhaoming Co., Ltd.

Previous wording

We were incorporated in the State of Delaware on January 4, 2005. We are a holding company for two principal owned subsidiaries. SemiLEDs Optoelectronics Co., Ltd., or Taiwan SemiLEDs, is our wholly owned operating subsidiary, where a substantial portion of our assets are held and located, and where a portion of our research, development, manufacturing and sales activities take place. Taiwan SemiLEDs had a wholly owned subsidiary. Taiwan Bandaoti Zhaoming Co., Ltd., formerly known as Silicon Base Development, Inc., which is engaged in the research, development, manufacturing and a substantial portion of marketing and sale of LED components, and where most of the Company’s employees are based.

Current wording

We were incorporated in the State of Delaware on January 4, 2005. We are a holding company for our wholly owned operating subsidiary, Taiwan Bandaoti Zhaoming Co., Ltd., which conducts our research, development, manufacturing, marketing and sale of LED components and employs the Company’s employees.

Previous 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.

Current wording

In the third 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 $16.5 million in the third quarter of fiscal 2025, and the associated cost of revenue was $15.7 million.

Previous wording

We anticipate more buy-sell purchase orders in the third quarter of fiscal 2025. As a result of these purchase orders and associated uncertainty of the business, our revenue, cost of revenues, receivables, inventories and customer deposits over the next quarter may be varied significantly. We cannot assure you when, or if, the revenue will be recognized, when payments will be received, or if we will receive further orders in the future.

Current wording

We anticipate more buy-sell purchase orders in the fourth quarter of fiscal 2025. As a result of these purchase orders and associated uncertainty of the business, our revenue, cost of revenues, receivables, inventories and customer deposits over the next quarter may vary significantly. We cannot assure you when, or if, the revenue will be recognized, when payments will be received, or if we will receive further orders in the future.

Previous wording

Our ability to continue to innovate. As part of our growth strategy, we plan to continue to be innovative in product design, to deliver new products and to improve our manufacturing efficiencies. Our continued success depends on our ability to develop and introduce new, technologically advanced and lower cost products, such as more efficient, better performance LED component products. If we are unable to introduce new products that are commercially viable and meet rapidly evolving customer requirements or keep pace with evolving technological standards and market developments or are otherwise unable to execute our product innovation strategy effectively, we may not be able to take advantage of market opportunities as they arise, execute our business plan or be able to compete effectively. To differentiate ourselves from other LED package manufacturers, we are putting more resources towards module and system design. Along with our technical know-how in the chip and package sectors, we are able to further integrate electrical, thermal and mechanical manufacturing resources to provide customers with one-stop system services. Services include design, prototyping, OEM and ODM. Key markets that we intend to target at the system end include different types of UV LED industrial printers, aquarium lighting, medical applications, niche imaging light engines, horticultural lighting and high standard commercial lighting. The modules are designed for various printing, curing, and PCB exposure industrial equipment, providing uncompromised reliability and optical output. Our LED components include different sizes and wattage to accommodate different demands in the LED market.

Current wording

LED component products. If we are unable to introduce new products that are commercially viable and meet rapidly evolving customer requirements or keep pace with evolving technological standards and market developments or are otherwise unable to execute our product innovation strategy effectively, we may not be able to take advantage of market opportunities as they arise, execute our business plan or be able to compete effectively. To differentiate ourselves from other LED package manufacturers, we are putting more resources towards module and system design. Along with our technical know-how in the chip and package sectors, we are able to further integrate electrical, thermal and mechanical manufacturing resources to provide customers with one-stop system services. Services include design, prototyping, OEM and ODM. Key markets that we intend to target at the system end include different types of UV LED industrial printers, aquarium lighting, medical applications, niche imaging light engines, horticultural lighting and high standard commercial lighting. The modules are designed for various printing, curing, and PCB exposure industrial equipment, providing uncompromised reliability and optical output. Our LED components include different sizes and wattage to accommodate different demands in the LED market.

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 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.

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 nine months ended May 31, 2025, sales to our three largest customers, in the aggregate, accounted for 97% and 93% of our revenues, respectively.

Previous 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.

Current wording

Cash position. Our cash and cash equivalents increased to $2.4 million as of May 31, 2025 from $1.7 million as of May 31, 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

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

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.

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 $50 thousand and $77 thousand for the three months ended February 28, 2025 and February 29, 2024, 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 $39 thousand and $119 thousand for the three months ended May 31, 2025 and 2024, respectively. Inventory write‑downs to estimated net realizable values were $185 thousand and $300 thousand for the nine months ended May 31, 2025 and 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 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.

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 May 31, 2025, the exchange rate was 29.91 NT dollars to one U.S. dollar. On July 7, 2025, the exchange rate was 29.03 NT dollars to one U.S. dollar.

Previous 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.

Current wording

(1) Other revenues for the three months ended May 31, 2025 primarily represent revenues attributable to the buy-sell purchase orders of equipment, and other revenues for the three months ended May 31, 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

Our revenues increased to $10.9 million for the three months ended February 28, 2025 from $886 thousand for the three months ended February 29, 2024. The increase in revenues was driven almost entirely by the $10.0 million increase in sales of other revenues.

Current wording

Our revenues increased to $17.7 million for the three months ended May 31, 2025 from $1.3 million for the three months ended May 31, 2024. The increase in revenues was driven almost entirely by the $16.5 million increase in sales of other revenues as a result of buy-sell purchase orders of equipment.

Previous 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.

Current wording

Revenues attributable to the sales of our LED chips were $30 thousand and $33 thousand of our revenues for the three months ended May 31, 2025 and 2024, respectively. The decrease 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 $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.

Current wording

Revenues attributable to the sales of our LED components were $360 thousand and $520 thousand for the three months ended May 31, 2025 and 2024, 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 $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.

Current wording

Revenues attributable to the sales of lighting products were $47 thousand and $72 thousand for the three months ended May 31, 2025 and 2024, respectively. The decrease in sales of lighting products was primarily due to less volumes sold.

Previous wording

Revenues attributable to other revenues were $10.1 million and $292 thousand of our revenues for the three months ended February 28, 2025 and February 29, 2024, respectively. The increase in revenues attributable to other revenues in the three months ended February 28, 2025 was primarily due to buy-sell purchase orders of equipment.

Current wording

Revenues attributable to other revenues were $17.2 million and $698 thousand of our revenues for the three months ended May 31, 2025 and 2024, respectively. The increase in revenues attributable to other revenues in the three months ended May 31 2025 was primarily due to buy-sell purchase orders of equipment.

Previous 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.

Current wording

Our cost of revenues increased from $780 thousand for the three months ended May 31, 2024 to $16.7 million for the three months ended May 31, 2025. The increase in cost of revenues was due to the buy-sell purchase orders of equipment.

Previous wording

Our gross profit represented 9% and 13% of our revenues for the three months ended February 28, 2025 and February 29, 2024, respectively. The increase in gross profit for the three months ended February 28, 2025 was primarily due to the buy-sell purchase orders of equipment.

Current wording

Our gross profit represented 5% and 41% of our revenues for the three months ended May 31, 2025 and 2024, respectively. The decrease in gross profit for the three months ended May 31, 2025 was primarily due to the buy-sell purchase orders of equipment, which have lower margins that sales of our products.

Previous wording

Our research and development expenses increased from $251 thousand for the three months ended February 29, 2024 to $279 thousand for the three months ended February 28, 2025. The increase was primarily due to a $65 thousand increase in materials and supplies used in research and development, partially offset by a $32 thousand decrease in payroll expense.

Current wording

Our research and development expenses decreased from $320 thousand for the three months ended May 31, 2024 to $292 thousand for the three months ended May 31, 2025. The decrease was primarily due to a $31 thousand decrease in materials and supplies used in research and development.

Previous wording

Our selling, general and administrative expenses decreased from $693 thousand for the three months ended February 29, 2024 to $614 thousand for the three months ended February 28, 2025. The decrease was mainly attributable to a decrease in payroll expense and professional service fees.

Current wording

Our selling, general and administrative expenses increased from $696 thousand for the three months ended May 31, 2024 to $709 thousand for the three months ended May 31, 2025. The increase was mainly attributable to an $20 thousand increase in shipping expense and an $8 thousand increase in payroll expense, partially offset by a $16 thousand decrease in professional service fees.

Previous wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities increased from $5 thousand for the three months ended February 29, 2024 to $10 thousand for the three months ended February 28, 2025, primarily due to the decrease in equity method investments.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities increased from $3 thousand for the three months ended May 31, 2024 to $9 thousand for the three months ended May 31, 2025, primarily due to the decrease in equity method investments.

Previous 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.

Current wording

Other income, net Other income, net, which primarily consisted of rental income, decreased from $277 thousand for the three months ended May 31, 2024, to $266 thousand for the three months ended May 31, 2025, primarily due to the decrease of rental income.

Previous 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.

Current wording

Foreign currency transaction gain (loss), net We recognized a net foreign currency transaction gain of $48 thousand and a net foreign currency transaction loss of $59 thousand for the three months ended May 31, 2025 and 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

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.

Current wording

Our effective tax rate is expected to be approximately zero for fiscal 2025 and 2024, since Taiwan Bandaoti Zhaoming Co., Ltd. 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 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.

Current wording

We recognized net income attributable to non-controlling interests of zero and $3 thousand for the three months ended May 31, 2025 and 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 May 31, 2025 and 2024, respectively.

Previous wording

Six Months Ended February 28, 2025 Compared to the Six Months Ended February 29, 2024

Current wording

Nine Months Ended May 31, 2025 Compared to the Nine Months Ended May 31, 2024

Previous wording

(1) Other revenues for the six months ended February 28, 2025 primarily include revenues attributable to the buy-sell purchase orders of equipment, and other revenues for the six 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.

Current wording

(1) Other revenues for the nine months ended May 31, 2025 primarily represent revenues attributable to the buy-sell purchase orders of equipment, and other revenues for the nine months ended May 31, 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

Our revenues increased from $2.5 million for the six months ended February 29, 2024 to $12.1 million for the six months ended February 28, 2025. The increase in revenues was driven almost entirely by the $10.0 million increase in sales of other revenues.

Current wording

Our revenues increased from $3.9 million for the nine months ended May 31, 2024 to $29.8 million for the nine months ended May 31, 2025. The increase in revenues was driven almost entirely by the $26.4 million increase in sales of other revenues as a result of buy-sell purchase orders of equipment.

Previous wording

Revenues attributable to the sales of our LED chips were $94 thousand and $59 thousand for the six 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.

Current wording

Revenues attributable to the sales of our LED chips were $124 thousand and $93 thousand for the nine months ended May 31, 2025 and 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 $1.2 million and $1.6 million for the six months ended February 28, 2025 and February 29, 2024, 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 $1.6 million and $2.1 million for the nine months ended May 31, 2025 and 2024, 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 $117 thousand and $97 thousand for the six months ended February 28, 2025 and February 29, 2024, 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 $163 thousand and $169 thousand for the nine months ended May 31, 2025 and 2024, respectively. The decrease in sales of lighting products was primarily due to less volumes sold.

Previous wording

Revenues attributable to other revenues were $10.7 million and $760 thousand for the six months ended February 28, 2025 and February 29, 2024, respectively. The increase in revenues attributable to other revenues in the six months ended February 28, 2025 was primarily due to the buy-sell purchase orders of equipment.

Current wording

Revenues attributable to other revenues were $27.9 million and $1.5 million for the nine months ended May 31, 2025 and 2024, respectively. The increase in revenues attributable to other revenues in the nine months ended May 31, 2025 was primarily due to the buy-sell purchase orders of equipment.

Previous wording

Our cost of revenues were $10.9 million and $2.2 million for the six months ended February 28, 2025 and February 29, 2024, respectively. The increase in cost of revenues was due to the buy-sell purchase orders of equipment.

Current wording

Our cost of revenues were $27.6 million and $3.0 million for the nine months ended May 31, 2025 and 2024, respectively. The increase in cost of revenues was due to the buy-sell purchase orders of equipment.

Previous 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.

Current wording

Our research and development expenses were $792 thousand and $943 thousand for the nine months ended May 31, 2025 and 2024, respectively. The decrease was primary due to a $10 thousand decrease in payroll expense, a $59 thousand decrease in compensation expense, and a $75 thousand decrease in materials and supplies used in research and development.

Previous wording

Our selling, general and administrative expenses were $1.3 million for the six months ended February 28, 2025 and $1.4 million for the six months ended February 29, 2024, respectively. The decrease was mainly attributable to a decrease in payroll expense and professional service fees.

Current wording

Our selling, general and administrative expenses were $2.0 million for the nine months ended May 31, 2025 and $2.1 million for the nine months ended May 31, 2024, respectively. The decrease was mainly attributable to a decrease in compensation expense and professional service fees.

Previous 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.

Current wording

We recognized zero and a net gain of $50 thousand on the disposal of long-lived assets for the nine months ended May 31, 2025 and 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 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.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities was $22 thousand and zero for the nine months ended May 31, 2025 and 2024, respectively, primarily due to the decrease in equity method investments.