SemiLEDs Corp

Previous wording

Our ability to improve our gross margins, reduce our net losses and restore our operations to profitability.

Current wording

Our ability to improve our gross margins, generate net income and restore our operations to profitability.

Previous wording

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

Previous wording

We package our LED chips into LED components, which we sell to distributors and a customer base that is heavily concentrated in a few select markets, including India, Japan, the United States 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. 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.

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 Japan, the United States, India 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. 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

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. We did not have any buy-sell purchase orders during the second quarter of fiscal 2026.

Current wording

In the third quarter of fiscal 2026, 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 $7.4 million in the third quarter of fiscal 2026, and the associated cost of revenue was $5.1 million.

Previous wording

We anticipate buy-sell purchase orders in the third 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.

Current wording

We anticipate buy-sell purchase orders in the fourth 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

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 United States 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 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, 2026, sales to our three largest customers, in the aggregate, accounted for 59% of our revenues.

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 Japan, the United States, India 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 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, 2026, sales to our three largest customers, in the aggregate, accounted for 95% and 81% of our revenues, respectively.

Previous wording

Cash position. Our cash and cash equivalents increased to $4.0 million as of February 28, 2026 from $2.4 million as of February 28, 2025. 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 $6.0 million as of May 31, 2026 from $2.4 million as of May 31, 2025. 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’s revenues for the six months ended February 28, 2026 were significantly derived from buy-sell purchase orders of equipment.

Current wording

The Company’s revenues for the nine months ended May 31, 2026 were primarily derived from buy-sell purchase orders of equipment.

Previous wording

The allowance for doubtful accounts is based on management’s assessment of the collectability of customer accounts. Management regularly reviews the allowance by considering certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. No bad debt expenses were recognized during the three and six months ended February 28, 2026 and 2025.

Current wording

The allowance for doubtful accounts is based on management’s assessment of the collectability of customer accounts. Management regularly reviews the allowance by considering certain factors such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay. No bad debt expenses were recognized during the three and nine months ended May 31, 2026 and 2025.

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 $126 thousand and $50 thousand for the three months ended February 28, 2026 and 2025, 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 $129 thousand and $39 thousand for the three months ended May 31, 2026 and 2025, respectively. Inventory write‑downs to estimated net realizable values were $407 thousand and $185 thousand for the nine months ended May 31, 2026 and 2025, 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, 2026, the exchange rate was 31.23 NT dollars to one U.S. dollar. On April 6, 2026, the exchange rate was 31.52 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, 2026, the exchange rate was 31.36 NT dollars to one U.S. dollar. On July 7, 2026, the exchange rate was 32.15 NT dollars to one U.S. dollar.

Previous wording

Our revenues decreased by 70% from $12.1 million for the six months ended February 28, 2025 to $3.6 million for the six months ended February 28, 2026. The decrease in revenues was driven almost entirely by the $8.7 million decrease in sales of other revenues as a result of a reduction in buy-sell purchase orders of equipment.

Current wording

Our revenues decreased by 49% from $17.7 million for the three months ended May 31, 2025 to $9.1 million for the three months ended May 31, 2026. The decrease in revenues was driven almost entirely by the $9.1 million decrease in sales of other revenues as a result of a reduction in buy-sell purchase orders of equipment.

Previous wording

Revenues attributable to the sales of our LED chips were $26 thousand and $29 thousand of our revenues for the three months ended February 28, 2026 and 2025, 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 $18 thousand and $30 thousand of our revenues for the three months ended May 31, 2026 and 2025, respectively. The decrease in sales of LED chips was primarily due to lower volumes of LED chips.

Previous wording

Revenues attributable to the sales of our LED components were $423 thousand and $682 thousand for the three months ended February 28, 2026 and 2025, respectively. The decrease in sales of LED components was primarily due to varying volumes sold for the LED components.

Current wording

Revenues attributable to the sales of our LED components were $998 thousand and $360 thousand for the three months ended May 31, 2026 and 2025, respectively. The increase in sales of LED components was primarily due to higher volumes of LED components.

Previous wording

Revenues attributable to the sales of our lighting products were $69 thousand and $58 thousand for the three months ended February 28, 2026 and 2025, respectively. The increase in sales of lighting products was primarily due to varying volumes sold for lighting products.

Current wording

Revenues attributable to the sales of our lighting products were $90 thousand and $47 thousand for the three months ended May 31, 2026 and 2025, respectively. The increase in sales of lighting products was primarily due to higher volumes of lighting products.

Previous wording

Revenues attributable to our other revenues were $546 thousand and $10.1 million of our revenues for the three months ended February 28, 2026 and 2025, respectively. The decrease in other revenues was primarily due to absence of buy-sell purchase orders of equipment in the three months ended February 28, 2026.

Current wording

Revenues attributable to our other revenues were $8.0 million and $17.2 million of our revenues for the three months ended May 31, 2026 and 2025, respectively. The decrease in other revenues for the three months ended May 31 2025 was primarily due to a reduction in buy-sell purchase orders of equipment.

Previous wording

Our cost of revenues decreased by 89% from $10 million for the three months ended February 28, 2025 to $1.1 million for the three months ended February 28, 2026. The decrease in cost of revenues was due to the absence of cost of equipment relating to buy-sell purchase orders of equipment.

Current wording

Our cost of revenues decreased by 60% from $16.7 million for the three months ended May 31, 2025 to $6.6 million for the three months ended May 31, 2026. The decrease in cost of revenues was due to a reduction in the buy-sell purchase orders of equipment.

Previous wording

Our gross profit represented 1% and 9% of our revenues for the three months ended February 28, 2026 and 2025, respectively. The decrease in gross margin for the three months ended February 28, 2026 was primarily due to the absence of buy-sell purchase orders of equipment.

Current wording

Our gross profit represented 27% and 5% of our revenues for the three months ended May 31, 2026 and 2025, respectively. The increase in gross margin for the three months ended May 31, 2026 was primarily due to improved margins on the buy-sell purchase orders of equipment.

Previous wording

Our research and development expenses decreased from $279 thousand for the three months ended February 28, 2025 to $276 thousand for the three months ended February 28, 2026. The decrease was primarily due to a $55 thousand increase in payroll expense offset by a $60 thousand decrease in materials and supplies used in research and development.

Current wording

Our research and development expenses increased from $292 thousand for the three months ended May 31, 2025 to $363 thousand for the three months ended May 31, 2026. The increase was primarily due to a $74 thousand increase in payroll and compensation expense and a $6 thousand increase in insurance expense, partially offset by a $10 thousand decrease in materials and supplies used in research and development.

Previous wording

Our selling, general and administrative expenses decreased from $614 thousand for the three months ended February 28, 2025 to $575 thousand for the three months ended February 28, 2026. The decrease was mainly attributable to a $37 thousand decrease in shipping expense, a $27 thousand decrease in payroll expense and a $23 thousand decrease in professional service expense, partially offset by a $31 thousand increase in utilities expense and a $31 thousand increase in travel expense.

Current wording

Our selling, general and administrative expenses decreased from $709 thousand for the three months ended May 31, 2025 to $681 thousand for the three months ended May 31, 2026. The decrease was mainly attributable to a $42 thousand decrease in payroll expense.

Previous wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities decreased from $10 thousand for the three months ended February 28, 2025 to $6 thousand for the three months ended February 28, 2026, primarily due to the increase in the fair value of equity method investments.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities decreased from $9 thousand for the three months ended May 31, 2025 to $2 thousand for the three months ended May 31, 2026, primarily due to the increase 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, decreased from $42 thousand for the three months ended February 28, 2025 to $22 thousand for the three months ended February 28, 2026. The decrease in interest expense, net was primarily due to the repayment of $1.6 million of loan principal in fiscal year 2025.

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 $20 thousand for the three months ended May 31, 2025 to $10 thousand for the three months ended May 31, 2026. The decrease in interest expense, net was primarily due to the repayment of $1.6 million of loan principal in fiscal year 2025.

Previous wording

Other income, net Other income, net increased from $265 thousand for the three months ended February 28, 2025 to $275 thousand for the three months ended February 28, 2026, primarily due to increased rental income.

Current wording

Other income, net Other income, net increased from $266 thousand for the three months ended May 31, 2025 to $270 thousand for the three months ended May 31, 2026, primarily due to increased rental income.

Previous wording

Foreign currency transaction (loss) gain, net We recognized a net foreign currency transaction loss of $5 thousand and a net foreign currency transaction gain of $65 thousand for the three months ended February 28, 2026 and 2025, 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 (loss) gain, net We recognized a net foreign currency transaction loss of $150 thousand and a net foreign currency transaction gain of $48 thousand for the three months ended May 31, 2026 and 2025, 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 payable.

Previous wording

Six Months Ended February 28, 2026 Compared to the Six Months Ended February 28, 2025

Current wording

Nine Months Ended May 31, 2026 Compared to the Nine Months Ended May 31, 2025

Previous wording

(1) Other revenues for the six months ended February 28, 2026 and 2025 primarily represent revenues attributable to buy-sell purchase orders of equipment.

Current wording

(1) Other revenues for the nine months ended May 31, 2026 and 2025 primarily represent revenues attributable to buy-sell purchase orders of equipment.

Previous wording

Our revenues decreased by 90% from $10.9 million for the three months ended February 28, 2025 to $1.1 million for the three months ended February 28, 2026. The decrease in revenues was driven almost entirely by the $10.0 million decrease in sales of other revenues as a result of the absence of any buy-sell purchase orders of equipment in the three months ended February 28, 2026.

Current wording

Our revenues decreased by 57% from $29.8 million for the nine months ended May 31, 2025 to $12.7 million for the nine months ended May 31, 2026. The decrease in revenues was driven almost entirely by the $17.3 million decrease in sales of other revenues as a result of a reduction in buy-sell purchase orders of equipment.

Previous wording

Revenues attributable to the sales of our LED chips were $31 thousand and $94 thousand of our revenues for the six months ended February 28, 2026 and 2025, 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 $50 thousand and $124 thousand of our revenues for the nine months ended May 31, 2026 and 2025, respectively. The decrease in sales of LED chips was primarily due to lower volumes of LED chips.

Previous wording

Revenues attributable to the sales of our LED components were $1.1 million and $1.2 million for the six months ended February 28, 2026 and 2025, respectively. The decrease in sales of LED components was primarily due to varying volumes sold for the LED components.

Current wording

Revenues attributable to the sales of our LED components were $2.1 million and $1.6 million for the nine months ended May 31, 2026 and 2025, respectively. The increase in sales of LED components was primarily due to higher volumes of LED components.

Previous wording

Revenues attributable to the sales of our lighting products were $116 thousand and $117 thousand for the six months ended February 28, 2026 and 2025, respectively. The decrease in sales of lighting products was primarily due to varying volumes sold for lighting products.

Current wording

Revenues attributable to the sales of our lighting products were $206 thousand and $163 thousand for the nine months ended May 31, 2026 and 2025, respectively. The increase in sales of lighting products was primarily due to higher volumes of lighting products.

Previous wording

Revenues attributable to our other revenues were $2.4 million and $10.7 million of our revenues for the six months ended February 28, 2026 and 2025, respectively. The decrease in other revenues was primarily due to a reduction in buy-sell purchase orders of equipment.

Current wording

Revenues attributable to our other revenues were $10.3 million and $27.9 million of our revenues for the nine months ended May 31, 2026 and 2025, respectively. The decrease in other revenues was primarily due to a reduction in buy-sell purchase orders of equipment.

Previous wording

Our cost of revenues decreased by 67% from $10.9 million for the six months ended February 28, 2025 to $3.6 million for the six months ended February 28, 2026. The decrease in cost of revenues was due to a reduction in the cost of equipment relating to buy-sell purchase orders of equipment.

Current wording

Our cost of revenues decreased by 63% from $27.6 million for the nine months ended May 31, 2025 to $10.2 million for the nine months ended May 31, 2026. The decrease in cost of revenues was due to a reduction in the cost of equipment relating to buy-sell purchase orders of equipment.

Previous wording

Our gross profit represented 1% and 11% of our revenues for the six months ended February 28, 2026 and 2025, respectively. The decrease in gross margin for the six months ended February 28, 2026 was primarily due to a reduction in revenue relating to buy-sell purchase orders of equipment.

Current wording

Our gross profit represented 20% and 7% of our revenues for the nine months ended May 31, 2026 and 2025, respectively. The increase in gross margin for the nine months ended May 31, 2026 was primarily due to improved margins on buy-sell purchase orders of equipment.

Previous wording

Our research and development expenses increased from $500 thousand for the three months ended February 28, 2025 to $632 thousand for the six months ended February 28, 2026. The increase was primarily due to a $131 thousand increase in payroll expense.

Current wording

Our research and development expenses increased from $792 thousand for the three months ended May 31, 2025 to $995 thousand for the nine months ended May 31, 2026. The increase was primarily due to a $182 thousand increase in payroll expense.

Previous wording

Our selling, general and administrative expenses decreased from $1.3 million for the six months ended February 28, 2025 to $1.3 million for the three months ended February 28, 2026. The decrease was mainly attributable to a $75 thousand decrease in payroll expense and a $37 thousand decrease in professional service expense, partially offset by a $40 thousand increase in utilities expense, a $12 thousand increase in travel expense and a $8 thousand increase in depreciation expense.

Current wording

Our selling, general and administrative expenses decreased from $2.0 million for the nine months ended May 31, 2025 to $1.9 million for the nine months ended May 31, 2026. The decrease was mainly attributable to a $146 thousand decrease in payroll and compensation expense and a $53 thousand decrease in professional service fees, partially offset by a $50 thousand increase in utilities expense and a $42 thousand increase in bank charges expense.

Previous wording

We recognized a net gain of $30 thousand and zero on the disposal of long-lived assets for the six months ended February 28, 2026 and 2025, respectively. Due to the excess capacity charges that we have suffered for the last few years, and considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of certain of our idle equipment.

Current wording

We recognized a net gain of $29 thousand and zero on the disposal of long-lived assets for the nine months ended May 31, 2026 and 2025, 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 from unconsolidated entities Investment loss from unconsolidated entities increased from $13 thousand for the three months ended February 28, 2025 to $15 thousand for the six months ended February 28, 2026, primarily due to the decrease in the fair value of equity method investments.

Current wording

Investment loss from unconsolidated entities Investment loss from unconsolidated entities decreased from $22 thousand for the nine months ended May 31, 2025 to $17 thousand for the nine months ended May 31, 2026, primarily due to the increase 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, decreased from $109 thousand for six months ended February 28, 2025 to $34 thousand for six months ended February 28, 2026. The decrease in interest expense, net was primarily due to the repayment of $1.6 million of loan principal in fiscal year 2025.

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 $130 thousand for nine months ended May 31, 2025 to $44 thousand for nine months ended May 31, 2026. The decrease in interest expense, net was primarily due to the repayment of $1.6 million of loan principal in fiscal year 2025.

Previous wording

Foreign currency transaction gain (loss), net We recognized a net foreign currency transaction gain of $16 thousand and a net foreign currency transaction loss of $37 thousand for three months ended February 28, 2026 and 2025, 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 loss of $134 thousand and a net foreign currency transaction gain of $11 thousand for nine months ended May 31, 2026 and 2025, 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 payable.

Previous wording

As of February 28, 2026 and August 31, 2025, we had cash and cash equivalents of $4.0 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits and/or money market funds. We require cash to fund our operating expenses, working capital requirements and service our debts, including principal and interest.

Current wording

As of May 31, 2026 and August 31, 2025, we had cash and cash equivalents of $6.0 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits. We require cash to fund our operating expenses, working capital requirements and service our debts, including principal and interest.