SemiLEDs Corp

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 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.

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. In addition, beginning in fiscal year 2025, we have entered into number buy-sell orders for equipment that we purchased and then sold to our customer.

Previous wording

These technical capabilities enable us to produce LED chips, LED component, LED modules and System products. We believe these capabilities and know-how should also allow us to reduce our manufacturing costs and our dependence on sapphire, a costly raw material used in the production of sapphire-based LED devices.

Current wording

These technical capabilities enable us to produce LED chips, LED components, LED modules and System products. We believe these capabilities and know-how should also allow us to reduce our manufacturing costs and our dependence on sapphire, a costly raw material used in the production of sapphire-based LED devices.

Previous 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.

Current wording

In the first quarter of fiscal 2026, we entered into 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 $1.3 million in the first quarter of fiscal 2026, and the associated cost of revenue was $1.2 million.

Previous 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.

Current wording

We anticipate buy-sell purchase orders in the second quarter of fiscal 2026. As a result of these purchase orders and associated uncertainty of the business, our revenue, cost of revenues, receivables, inventories and customer deposits over future quarters may vary significantly. In addition, if our shipments are delayed, revenue recognition may be delayed into future quarters. 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 or grow with buy-sell revenue. Our reliance on buy-sell purchase orders of equipment has recently improved our gross margin, operating results and cash flows. We anticipate our buy-sell purchase orders will continue from period to period. However, if orders diminish, our gross margin, operating results, and cash flows could be adversely affected.

Current wording

Our ability to continue or grow with buy-sell revenue. Our recent reliance on buy-sell purchase orders of equipment has improved our gross profit, operating results and cash flows. We anticipate our buy-sell purchase orders will continue from period to period. However, if orders diminish or cease altogether, our gross margin, operating results, and cash flows could be adversely affected.

Previous wording

Our ability to reduce cost to offset lower average selling prices. Competitors may reduce average selling prices faster than our ability to reduce costs, and competitive pricing pressures may accelerate the rate of decline of our average selling prices. To address increased pricing pressure, we have improved and increased our production yields to reduce the per-unit cost of production of our products. However, such cost savings currently have limited impact on our gross profit, as we currently suffer from the underutilization of manufacturing capacity and must absorb a high level of fixed costs, such as depreciation. While we intend to focus on managing our costs and expenses, over the long term we expect to be required to invest substantially in LED component products development and production equipment if we are to grow.

Current wording

Our ability to reduce cost to offset lower average selling prices. Competitors may reduce average selling prices faster than our ability to reduce costs, and competitive pricing pressures may accelerate the rate of decline of our average selling prices. To address increased pricing pressure, we have improved and increased our production yields to reduce the per-unit cost of production of our products. However, such cost savings currently have limited impact on our gross profit, as we currently suffer from the underutilization of manufacturing capacity and must absorb a high level of fixed costs, such as depreciation. While we intend to focus on managing our costs and expenses, over the long term we expect to be required to invest substantially in LED components product development and production equipment if we are to grow.

Previous 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.

Current 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 components product. 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 nine months ended May 31, 2025, sales to our three largest customers, in the aggregate, accounted for 97% and 93% 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 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, 2025 and 2024, sales to our three largest customers, in the aggregate, accounted for 69% and 78% of our revenues, respectively.

Previous 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.

Current wording

Cash position. Our cash and cash equivalents increased to $2.9 million as of November 30, 2025 from $1.2 million as of November 30, 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 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.

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 $152 thousand and $96 thousand for the three months ended November 30, 2025 and 2024, respectively.

Previous wording

We are a Delaware corporation and, under SEC requirements, must report our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. At the same time, our subsidiaries use the local currency as their functional currency. For example, the functional currency for Taiwan SemiLEDs is the NT dollar. The assets and liabilities of the subsidiaries are, therefore, translated into U.S. dollars at exchange rates in effect at each balance sheet date, and income and expense accounts are translated at average exchange rates during the period. The resulting translation adjustments are recorded to a separate component of accumulated other comprehensive income (loss) within equity. Any gains and losses from transactions denominated in currencies other than their functional currencies are recognized in the consolidated statements of operations as a separate component of other income (expense). Due to exchange rate fluctuations, such translated amounts may vary from quarter to quarter even in circumstances where such amounts have not materially changed when denominated in their functional currencies.

Current wording

We are a Delaware corporation and, under SEC requirements, must report our financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America, or U.S. GAAP. At the same time, our subsidiaries use the local currency as their functional currency. For example, the functional currency for Taiwan Bandaoti Zhaoming Co., Ltd. is the NT dollar. The assets and liabilities of the subsidiaries are, therefore, translated into U.S. dollars at exchange rates in effect at each balance sheet date, and income and expense accounts are translated at average exchange rates during the period. The resulting translation adjustments are recorded to a separate component of accumulated other comprehensive income (loss) within equity. Any gains and losses from transactions denominated in currencies other than their functional currencies are recognized in the consolidated statements of operations as a separate component of other income (expense). Due to exchange rate fluctuations, such translated amounts may vary from quarter to quarter even in circumstances where such amounts have not materially changed when denominated in their functional currencies.

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 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.

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 November 30, 2025, the exchange rate was 31.4 NT dollars to one U.S. dollar. On January 6, 2026, the exchange rate was 31.52 NT dollars to one U.S. dollar.

Previous 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.

Current wording

(1) Other revenues for the three months ended November 30, 2025 primarily represent revenues attributable to buy-sell purchase orders of equipment, and other revenues for the three months ended November 30, 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 $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.

Current wording

Our revenues increased by 104% from $1.3 million for the three months ended November 30, 2024 to $2.6 million for the three months ended November 30, 2025. The increase in revenues was driven almost entirely by the $1.3 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 $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.

Current wording

Revenues attributable to the sales of our LED chips were $5 thousand and $65 thousand of our revenues for the three months ended November 30, 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 $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.

Current wording

Revenues attributable to the sales of our LED components were $692 thousand and $561 thousand for the three months ended November 30, 2025 and 2024, respectively. The increase in sales of LED components was primarily due to varying volumes sold for the LED components.

Previous 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.

Current wording

Revenues attributable to the sales of our lighting products were $47 thousand and $59 thousand for the three months ended November 30, 2025 and 2024, respectively. The decrease in sales of lighting products was primarily due to varying volumes sold for lighting products.

Previous 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.

Current wording

Revenues attributable to our other revenues were $1.8 million and $576 thousand of our revenues for the three months ended November 30, 2025 and 2024, respectively. The increase in other revenues was primarily due to buy-sell purchase orders of equipment.

Previous 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.

Current wording

Our cost of revenues increased by 155% from $1.0 million for the three months ended November 30, 2024 to $2.5 million for the three months ended November 30, 2025. The increase in cost of revenues was due to the cost of equipment relating to buy-sell purchase orders of equipment.

Previous 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.

Current wording

Our gross profit represented 1% and 21% of our revenues for the three months ended November 30, 2025 and 2024, respectively. The decrease in gross margin for the three months ended November 30, 2025 was primarily due to the buy-sell purchase orders of equipment, which have lower margins compared to sales of our products.

Previous 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.

Current wording

Our research and development expenses increased from $221 thousand for the three months ended November 30, 2024 to $356 thousand for the three months ended November 30, 2025. The increase was primarily due to a $77 thousand increase in payroll expense and a $49 thousand increase in materials and supplies used in research and development.

Previous 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.

Current wording

Our selling, general and administrative expenses increased from $696 thousand for the three months ended November 30, 2024 to $703 thousand for the three months ended November 30, 2025. The increase was mainly attributable to a $28 thousand increase in shipping expense and a $22 thousand increase in cleaning expense, partially offset by a $48 thousand decrease in payroll expense.

Previous 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.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities increased from $3 thousand for the three months ended November 30, 2024 to $9 thousand for the three months ended November 30, 2025, primarily due to the decrease in the fair value of equity method investments.

Previous 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.

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, decreased from $67 thousand for three months ended November 30, 2024 to $12 thousand for three months ended November 30, 2025. The decrease in interest expense, net was primarily due to the repayment $1.6 million of loan principal in fiscal year 2025.

Previous 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.

Current wording

Other income, net Other income, net decreased from $282 thousand for three months ended November 30, 2024 to $269 thousand for three months ended November 30, 2025, primarily due to reduced rental income.

Previous 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.

Current wording

Foreign currency transaction gain (loss), net We recognized a net foreign currency transaction gain of $21 thousand and a net foreign currency transaction loss of $102 thousand for three months ended November 30, 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 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.

Current wording

Our effective tax rate is expected to be approximately zero for both fiscal year 2026 and 2025, 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 have several operating leases with third parties, primarily for land, plant and office spaces in Taiwan, including cancellable and noncancelable leases that, as of May 31, 2025, expire at various dates between August 2025 and December 2040. See Note 5, "Commitments and Contingencies" in the notes to our unaudited consolidated financial statements in this Form 10-Q.

Current wording

We have several operating leases with third parties, primarily for land, plant and office spaces in Taiwan, including cancellable and noncancelable leases that expire at various dates between August 2026 and December 2040. See Note 5, "Commitments and Contingencies" in the notes to our unaudited consolidated financial statements in this Form 10-Q.

Previous wording

As of May 31, 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.

Current wording

As of November 30, 2025 and August 31, 2025, we had cash and cash equivalents of $2.9 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits and/or money market funds. We require cash to fund our operating expenses, working capital requirements and service our debts, including principal and interest.

Previous wording

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

Current wording

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

Previous 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 May 31, 2025 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 $1.6 million and $1.7 million as of November 30, 2025 and August 31, 2025, respectively.

Previous wording

Our NT dollar denominated long-term notes, totaled $1.1 million and $1.3 million as of May 31, 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 $84 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 $769 thousand and $908 thousand as of November 30, 2025 and August 31, 2025, respectively. These long-term notes consist 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 $80 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 $25 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of May 31, 2025, our outstanding balance on this note payable was approximately $651 thousand.

Current wording

Starting from May 2021, the first note payable requires monthly payments of principal in the amount of $25 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of November 30, 2025, our outstanding balance on this note payable was approximately $477 thousand.

Previous wording

Starting from May 2021, the second note payable requires monthly payments of principal in the amount of $15 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of May 31, 2025, our outstanding balance on this note payable was approximately $399 thousand.

Current wording

Starting from May 2021, the second note payable requires monthly payments of principal in the amount of $15 thousand plus interest over the 74-month term of the note with final payment to occur in July 2027 and, as of November 30, 2025, our outstanding balance on this note payable was approximately $292 thousand.

Previous wording

Property, plant and equipment pledged as collateral for our notes payable were $1.9 million and $2.0 million as of May 31, 2025 and August 31, 2024, respectively.

Current wording

Property, plant and equipment pledged as collateral for our notes payable were $1.6 million and $1.7 million as of November 30, 2025 and August 31, 2025, respectively.

Previous 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.

Current wording

On January 8, 2019, we entered into 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 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.

Current wording

On January 7, 2024, J.R. Simplot Company 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

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.

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 amended the loan's 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 January 7, 2024, we issued 305,343 shares of our common stock at a price of $1.31 per share to repay $400,000 of accrued interest on the loan agreement with Simplot Taiwan Inc. The shares of common stock were issued in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended.

Current wording

On January 7, 2024, we issued 305,343 shares of our common stock at a price of $1.31 per share to repay $400,000 of accrued interest on the loan agreement with Simplot Taiwan Inc.

Previous wording

On February 9, 2024, we entered into the Fifth Amendment to the Loan Agreements with Trung Doan. The Fifth Amendment to the Loan Agreements with Trung Doan (i) amended the Loan Agreement to permit us to repay up to $800,000 of principal under the Loan Agreement by issuing shares of the our common stock and (ii) elected to prepay $800,000 of loan principal by delivering 629,921 shares of the our common stock to Trung Doan, based on the closing price of $1.27 per share on February 8, 2024. All other terms and conditions of the Loan Agreement remained the same.

Current wording

On February 9, 2024, we entered into the Fifth Amendment to the Loan Agreement with Trung Doan. The Fifth Amendment to the Loan Agreement with Trung Doan (i) amended the Loan Agreement to permit us to repay up to $800,000 of principal under the Loan Agreement by issuing shares of the our common stock and (ii) elected to prepay $800,000 of loan principal by delivering 629,921 shares of the our common stock to Trung Doan, based on the closing price of $1.27 per share on February 8, 2024. All other terms and conditions of the Loan Agreement remained the same.