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What changed in SemiLEDs Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of SemiLEDs Corp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+149 added−139 removedSource: 10-K (2024-11-27) vs 10-K (2023-11-28)

Top changes in SemiLEDs Corp's 2024 10-K

149 paragraphs added · 139 removed · 126 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

49 edited+8 added−4 removed344 unchanged
Biggest changeManufacturing Our manufacturing operations are located in Taiwan. Since late 2011, we have suffered from the underutilization of our manufacturing capacity, primarily for our LED chips. Consequently, a portion of our manufacturing equipment was idled, resulting in significant excess capacity charges.
Biggest changeThese new sensors, such as dot projectors using Meta lens and photoplethysmogram (PPG) sensors, are intended for smartwatches, smartphones and smart glasses. We also developing flood illuminator for 3D sensing. Manufacturing Our manufacturing operations are located in Taiwan. Since late 2011, we have suffered from the underutilization of our manufacturing capacity, primarily for our LED chips.
However, our management believes it has liquidity plan, as further described in elsewhere in this annual report that if executed successfully should provide sufficient liquidity to meet our obligations as they become due for a reasonable period of time.
However, our management believes it has a liquidity plan, as further described in elsewhere in this annual report that if executed successfully should provide sufficient liquidity to meet our obligations as they become due for a reasonable period of time.
We package our LED chips into LED components, which we sell to distributors and a customer base that is heavily concentrated in a few select markets, including Taiwan, the United States, the Netherlands, Norway and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets.
We package our LED chips into LED components, which we sell to distributors and a customer base that is heavily concentrated in a few select markets, including Taiwan, the United States, the Netherlands and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets.
Some of our existing and potential competitors possess significant advantages, including longer operating histories, greater financial, technical, managerial, marketing, distribution and other resources, more long-standing and established relationships with our existing and potential customers, greater name recognition, larger customer bases and greater government incentives and support. 8 Table of Contents We believe that the key competitive factors in our markets are: • consistently producing high-quality LED chips with high efficacy; • providing a low total cost of ownership (i.e., cost, efficacy and lifespan) for end-customers; • producing UVA LED for niche markets where customers value quality and performance more than cost; • providing unique and high performance UV LED systems to replace mercury lamp; • providing high precision packaging solutions to automotive industries to enable high accuracy demands for LiDAR applications, and • our sales channels.
Some of our existing and potential competitors possess significant advantages, including longer operating histories, greater financial, technical, managerial, marketing, distribution and other resources, more long-standing and established relationships with our existing and potential customers, greater name recognition, larger customer bases and greater government incentives and support. 8 Table of Contents We believe that the key competitive factors in our markets are: • consistently producing high-quality LED chips with high efficacy; • providing a low total cost of ownership (i.e., cost, efficacy and lifespan) for end-customers; • producing UVA LED for niche markets where customers value quality and performance more than cost; • providing unique and high performance UV LED systems to replace mercury lamp; • providing high precision packaging solutions to automotive industries to enable high accuracy demands for LiDAR applications; • providing a unique wafer level package technology; and • our sales channels.
Our ability to obtain external financing is subject to a number of uncertainties, including: • our future financial condition, results of operations and cash flows and the trading price of our common stock; • the state of global credit markets and our creditworthiness; • raising additional cash through potential equity offerings, including sales through an at-the-market, or ATM program, sales of assets and/or issuance of debt as considered necessary and looking at other potential business opportunities; • general market conditions for financing activities by companies in our industry; and • economic, political and other conditions in Taiwan, China and elsewhere.
Our ability to obtain external financing is subject to a number of uncertainties, including: • our future financial condition, results of operations and cash flows and the trading price of our common stock; • the state of global credit markets and our creditworthiness; • raising additional cash through potential equity offerings, sales of assets and/or issuance of debt as considered necessary and looking at other potential business opportunities; • general market conditions for financing activities by companies in our industry; and • economic, political and other conditions in Taiwan, China and elsewhere.
While we believe that these liquidity plan measures will be adequate to satisfy our liquidity requirements for the twelve months ending August 31, 2024, there is no assurance that the liquidity plan will be successfully implemented.
While we believe that these liquidity plan measures will be adequate to satisfy our liquidity requirements for the twelve months ending August 31, 2025, there is no assurance that the liquidity plan will be successfully implemented.
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. We were incorporated in the State of Delaware on January 4, 2005. We are a holding company for various wholly owned subsidiaries.
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. We were incorporated in the State of Delaware on January 4, 2005. We are a holding company for two principal owned subsidiaries.
We believe these equity awards create a sense of ownership for the employee and furthers employee commitment to the company’s long-term vision, while simultaneously helping to retain talented employees. As of August 31, 2023, we had approximately 152 employees. All of our employees are based in Taiwan. None of our employees are represented by a labor union.
We believe these equity awards create a sense of ownership for the employee and furthers employee commitment to the company’s long-term vision, while simultaneously helping to retain talented employees. As of August 31, 2024, we had approximately 116 employees. All of our employees are based in Taiwan. None of our employees are represented by a labor union.
Our revenue from sales in China (including Hong Kong) accounted for 2% and 4% of our revenues for the years ended August 31, 2023 and 2022, respectively. Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. We are subject to the U.S.
Our revenue from sales in China (including Hong Kong) accounted for 1% and 2% of our revenues for the years ended August 31, 2024 and 2023, respectively. Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences. We are subject to the U.S.
In accordance with NASDAQ Listing Rule 5605(c)(4)(B), we have been provided a cure period until the earlier of its next annual meeting of stockholders or July 10, 2024, or if the next annual stockholders’ meeting is held before January 8, 2024, then we must evidence compliance no later than January 8, 2024 to regain compliance with the audit committee requirements.
In accordance with Nasdaq Listing Rule 5605(c)(4)(B), we were provided a cure period until the earlier of our next annual meeting of stockholders or July 10, 2024, or if the next annual stockholders’ meeting is held before January 8, 2024, then we must evidence compliance no later than January 8, 2024 to regain compliance with the audit committee requirements.
We test all new processes and new products prior to commercial production. We also inspect all final products prior to deliver to our customers to ensure that production standards are met. If we encounter defects, we conduct an analysis in an effort to identify the cause of the defect and take appropriate corrective and preventative measures.
We also inspect all final products prior to deliver to our customers to ensure that production standards are met. If we encounter defects, we conduct an analysis in an effort to identify the cause of the defect and take appropriate corrective and preventative measures.
Our revenue and operating results may continue to decline for a variety of reasons, some of which are described elsewhere in this “Risk Factors” section and are beyond our control. As of August 31, 2023, we had an accumulated deficit of $187 million.
Our revenue and operating results may continue to decline for a variety of reasons, some of which are described elsewhere in this “Risk Factors” section and are beyond our control. As of August 31, 2024, we had an accumulated deficit of $189 million.
If our employees or other agents are found to have engaged in corrupt or fraudulent business practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. 24 Table of Contents Item 1B. Unresolv ed Staff Comments Not applicable. Item 1C. Cybersecurity Not applicable.
If our employees or other agents are found to have engaged in corrupt or fraudulent business practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations. Item 1B. Unresolv ed Staff Comments Not applicable.
Most of our operations are located in Taiwan, and the operations of many of our LED manufacturing service providers, suppliers and customers are located in Taiwan and the PRC. Our revenues derived from customers located in Taiwan and China (including Hong Kong) were 21% and 15% for the years ended August 31, 2023 and 2022, respectively.
Most of our operations are located in Taiwan, and the operations of many of our LED manufacturing service providers, suppliers and customers are located in Taiwan and the PRC. Our revenues derived from customers located in Taiwan and China (including Hong Kong) were 14% and 21% for the years ended August 31, 2024 and 2023, respectively.
For the years ended August 31, 2023 and 2022, sales to our three largest customers, in the aggregate, accounted for approximately 53% and 59% of our revenues, respectively. The sales cycle from initial contact to confirmed orders with our customers is typically long and unpredictable.
For the years ended August 31, 2024 and 2023, sales to our three largest customers, in the aggregate, accounted for approximately 61% and 53% of our revenues, respectively. The sales cycle from initial contact to confirmed orders with our customers is typically long and unpredictable.
At our investor relations website, we make available free of charge our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, and Current Reports on Form 8‑K, and any amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act, as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC.
Available Information At our investor relations website, https://www.semileds.com/investors , we make available free of charge our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, and Current Reports on Form 8‑K, and any amendments to those reports filed or furnished pursuant to Section 13 or 15(d) of the Exchange Act, as soon as reasonably practicable after such materials are electronically filed with or furnished to the SEC.
Revenues attributable to the sales of our LED components represented approximately 56% and 69% of our revenues for the years ended August 31, 2023 and 2022, respectively. We expect to continue to generate our revenues mainly from the sales of LED components for the foreseeable future.
Revenues attributable to the sales of our LED components represented approximately 51% and 56% of our revenues for the years ended August 31, 2024 and 2023, respectively. We expect to continue to generate our revenues mainly from the sales of LED components for the foreseeable future.
Net revenues generated from sales to customers in the Netherlands, Taiwan, the United States, and Japan, in the aggregate, accounted for approximately 89% and 83% of our net revenues for the years ended August 31, 2023 and 2022, respectively.
Net revenues generated from sales to customers in the Netherlands, Taiwan, the United States, and Japan, in the aggregate, accounted for approximately 91% and 89% of our net revenues for the years ended August 31, 2024 and 2023, respectively.
And our cash and cash equivalents decreased to $2.6 million at August 31, 2023, these facts and conditions raise substantial doubt about our ability to continue as a going concern, and our independent registered public accounting firm has included an explanatory paragraph regarding going concern qualification in its audit report.
And our cash and cash equivalents decreased to $1.7 million at August 31, 2024, these facts and conditions raise substantial doubt about our ability to continue as a going concern, and our independent registered public accounting firm has included an explanatory paragraph regarding going concern qualification in its audit report.
We incurred net losses attributable to SemiLEDs stockholders of $2.7 million for both the years ended August 31, 2023 and 2022. We can give no assurance that we will not continue to incur net losses in future periods.
We incurred net losses attributable to SemiLEDs stockholders of $2.0 and $2.7 million for the years ended August 31, 2024 and 2023, respectively. We can give no assurance that we will not continue to incur net losses in future periods.
The information found on our website is not part of this or any other report we file with or furnish to the SEC. In addition, the SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding us, and other issuers that file electronically with the SEC. 10 Table of Contents I tem 1A.
The information found on our website is not part of this or any other report we file with or furnish to the SEC. In addition, the SEC maintains a website (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding us, and other issuers that file electronically with the SEC.
We have developed advanced capabilities and proprietary know‑how in: • reusing sapphire substrate in subsequent production runs; • optimizing our epitaxial growth processes to create layers that efficiently convert electrical current into light; • employing a copper alloy base manufacturing technology to improve our chip’s thermal and electrical performance; • utilizing nanoscale surface engineering to improve usable light extraction; • manufacturing extremely small footprint LEDs with optimized yield, ideal for Mini LED applications; • developing a LED structure that generally consists of multiple epitaxial layers which are vertically‑stacked on top of a copper alloy base; • developing low cost Chip Scaled Packaging (CSP) technology; and • developing multi-pixel Mini LED packages for commercial displays. 4 Table of Contents These technical capabilities enable us to produce LED chips, LED component, LED modules and System products.
We have developed advanced capabilities and proprietary know‑how in: • reusing sapphire substrate in subsequent production runs; • optimizing our epitaxial growth processes to create layers that efficiently convert electrical current into light; • employing a copper alloy base manufacturing technology to improve our chip’s thermal and electrical performance; • utilizing nanoscale surface engineering to improve usable light extraction; • manufacturing extremely small footprint LEDs with optimized yield, ideal for Mini LED applications; • developing a LED structure that generally consists of multiple epitaxial layers which are vertically-stacked on top of a copper alloy base; • developing low cost Chip Scaled Packaging (CSP) technology; • developing multi-pixel Mini LED packages for commercial displays; and • developing small format AI sensors having a light source and photodetector in cooperation with our Japanese partners for various applications such as dot projectors and photoplethysmogram (PPG) sensors. 4 Table of Contents These technical capabilities enable us to produce LED chips, LED component, LED modules and System products.
International operations expose us to risks that are different from operating in the United States, including foreign currency translation and transaction risk, risk of changes in tax laws, application of import/export laws and regulations and other risks described further in Item 1A, Risk Factors, of this Annual Report. Available Information Our website is www.semileds.com .
International operations expose us to risks that are different from operating in the United States, including foreign currency translation and transaction risk, risk of changes in tax laws, application of import/export laws and regulations and other risks described further in Item 1A, Risk Factors, of this Annual Report.
For the year ended August 31, 2022, sales to Revlon, Inc. and INDEL Distribution B.V. accounted for 28% and 18% of our total revenues, respectively. 7 Table of Contents Our revenues are concentrated in a few select markets. We expect that our revenues will continue to be substantially derived from these countries for the foreseeable future.
For the year ended August 31, 2023, sales to INDEL Distribution B.V. and Revlon, Inc. accounted for 20% and 17% of our total revenues, respectively. Our revenues are concentrated in a few select markets. We expect that our revenues will continue to be substantially derived from these countries for the foreseeable future.
Epidemics, pandemics, and other outbreaks of an illness, disease, or virus (including COVID-19) have adversely affected, and could adversely affect in the future, workforces, customers, economies, and financial markets globally, potentially leading to economic downturns. 19 Table of Contents The significance of the impact on our operations of an epidemic, pandemic, or other outbreak depends on numerous factors that we may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of an outbreak (including the extent of surges, mutations, or strains of the outbreak and the efficacy of vaccination and other efforts to contain the outbreak or treat its effects); actions taken by governments, businesses, and individuals in response to the outbreak; the effect on economic activity and actions taken in response; the effect on customers and their demand for our products and services; the effect on the health, wellness, and productivity of our employees; and our ability to manufacture, sell, and service its products, including without limitation as a result of supply chain challenges, facility closures, social distancing, restrictions on travel, fear or anxiety by the populace, and shelter‑in‑place orders.
The significance of the 19 Table of Contents impact on our operations of an epidemic, pandemic, or other outbreak depends on numerous factors that we may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of an outbreak (including the extent of surges, mutations, or strains of the outbreak and the efficacy of vaccination and other efforts to contain the outbreak or treat its effects); actions taken by governments, businesses, and individuals in response to the outbreak; the effect on economic activity and actions taken in response; the effect on customers and their demand for our products and services; the effect on the health, wellness, and productivity of our employees; and our ability to manufacture, sell, and service its products, including without limitation as a result of supply chain challenges, facility closures, social distancing, restrictions on travel, fear or anxiety by the populace, and shelter‑in‑place orders.
As of August 31, 2023, we had 101 patents issued and 14 patents pending with the United States Patent and Trademark Office covering various aspects of our core technologies. As of August 31, 2023, we also had 111 patents issued and 17 patents pending before patent and trademark offices outside the United States.
As of August 31, 2024, we had 96 patents issued and 15 patents pending with the United States Patent and Trademark Office covering various aspects of our core technologies. As of August 31, 2024, we also had 96 patents issued and 14 patents pending before patent and trademark offices outside the United States.
As of November 20, 2023, our directors and executive officers, together with their affiliates, beneficially owned, in the aggregate, approximately 41.9% of our outstanding common stock.
As of November 20, 2024, our directors and executive officers, together with their affiliates, beneficially owned, in the aggregate, approximately 53.4% of our outstanding common stock.
Besides hardware, we also provide software development to lamp control and equipment-to-lamp signal communication. With our design capability and high precision packaging capabilities, Taiwan Bandaoti Zhaoming Co., Ltd., formerly known as Silicon Base Development, Inc., assisted in the design and manufacturing of transceiver modules to be used for ADAS (Advanced Driver Assistance Systems) applications.
With our design capability and high precision packaging capabilities, Taiwan Bandaoti Zhaoming Co., Ltd., formerly known as Silicon Base Development, Inc., assisted in the design and manufacturing of transceiver modules to be used for ADAS (Advanced Driver Assistance Systems) applications.
We also compete with numerous smaller companies entering the market, some of whom may receive significant government incentives and subsidies pursuant to government programs designed to encourage the use of LED lighting and to establish LED-sector companies.
We are also aware of a number of well-funded private companies that are developing competing products. We also compete with numerous smaller companies entering the market, some of whom may receive significant government incentives and subsidies pursuant to government programs designed to encourage the use of LED lighting and to establish LED-sector companies.
Some of our largest customers and what we produce, or 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 years ended August 31, 2024 and 2023, our top ten customers collectively accounted for approximately 91% of our revenues. Some of our largest customers and what we produce, or 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.
We also use contract manufacturers to produce 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.
Consequently, a portion of our manufacturing equipment was idled, resulting in significant excess capacity charges. We also use contract manufacturers to produce 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.
For example, as a strategic plan, we placed greater emphasis on the sales of LED components rather than the sales of LED chips where we have been forced to cut prices on older inventory. In 2022, sales increased but sales margin slightly decreased due to more volumes sold in LED components and lighting products compared to 2021.
For example, as a strategic plan, we placed greater emphasis on the sales of LED components rather than the sales of LED chips where we have been forced to cut prices on older inventory. In 2023, sales and gross margin both decreased due to a decline in other revenues rather than LED components compared to 2022.
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 years ended August 31, 2024 and 2023, our top ten customers collectively accounted for approximately 91% of our revenues. Some of our largest customers and what we produce/have produced for them change from quarter to quarter, primarily as a result of the timing of discrete, large project-based purchases and broadening customer base, among other things.
In 2023, sales and gross margin both decreased due to other revenues rather than LED components compared to 2022. We intend to continue to pursue opportunities for profitable growth in areas of business where we see the best opportunity for our UV market, focus on product enhancement and developing our UV LED into many other applications or devices.
We intend to continue to pursue opportunities for profitable growth in areas of business where we see the best opportunity for our UV market, focusing on product enhancement and developing our UV LED into many other applications or devices.
For the years ended August 31, 2023 and 2022, sales to our three largest customers, in the aggregate, accounted for 53% and 59% of our revenues, respectively. For the year ended August 31, 2023, sales to INDEL Distribution B.V. and Revlon, Inc. accounted for 20% and 17% of our total revenues, respectively.
For the years ended August 31, 2024 and 2023, sales to our three largest customers, in the aggregate, accounted for 61% and 53% of our revenues, respectively. For the year ended August 31, 2024, sales to Shin-Etsu Chemical Co., Ltd. and INDEL Distribution B.V. accounted for 31% and 18% of our total revenues, respectively.
Key markets that we set 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.
Key markets that we target at the system end include different types of UV LED industrial printers, aquarium lighting, medical applications, niche imaging light engines, horticultural lighting, high standard commercial lighting and multi-pixel Mini-LED package (16 RGB pixels in one package) for fine pitch Mini-LED display market, and disinfection markets.
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 these markets. Intellectual Property Our ability to compete successfully depends upon our ability to protect our proprietary technologies and other confidential information.
Therefore, our financial results will be impacted by general economic and political conditions in these markets. 7 Table of Contents Intellectual Property Our ability to compete successfully depends upon our ability to protect our proprietary technologies and other confidential information.
We may also see disruptions or delays in shipments and negative impacts to pricing of certain products as a result of such disruptions. Quality Management We have implemented quality control measures at each stage of our operations, including obtaining supplier qualifications, inspecting incoming raw materials and random testing during our production process, to ensure consistent product yield and reliability.
Quality Management We have implemented quality control measures at each stage of our operations, including obtaining supplier qualifications, inspecting incoming raw materials and random testing during our production process, to ensure consistent product yield and reliability. We test all new processes and new products prior to commercial production.
Revenues from sales of our lighting products represented 5% and 8% of our revenues for the years ended August 31, 2023 and 2022, respectively. OEM/ODM Services We provide design and manufacturing services at the modular and system level. Currently, most of the design projects involve high power UV LED lamps to be incorporated/retrofitted into large scale press equipment.
OEM/ODM Services We provide design and manufacturing services at the modular and system level. Currently, most of the design projects involve high power UV LED lamps to be incorporated/retrofitted into large scale press equipment. Besides hardware, we also provide software development to lamp control and equipment-to-lamp signal communication.
These potential competitors have extensive experience in developing semiconductor chips, which is similar to the manufacturing process for LED chips and LED packaging. We are also aware of a number of well-funded private companies that are developing competing products.
We compete with many LED chip manufacturers and LED packaging manufacturers, many of which compete directly with us and are much larger than us. These potential competitors have extensive experience in developing semiconductor chips, which is similar to the manufacturing process for LED chips and LED packaging.
We do not account for a significant percentage of the total market volume today, and we face significant competition from other more established providers of similar products as well as from new entrants into our markets. We compete with many LED chip manufacturers and LED packaging manufacturers, many of which compete directly with us and are much larger than us.
To succeed, however, we must continue to manufacture products that meet the demanding requirements of high performance at low costs. We do not account for a significant percentage of the total market volume today, and we face significant competition from other more established providers of similar products as well as from new entrants into our markets.
We may, from time to time, establish packaging operations in selected markets for sale to distributors and end-customers in such markets. We also contract with other manufacturers to produce for our LED components based on our design and technology requirements and under our quality control specifications and final inspection process.
We also contract with other manufacturers to produce for our LED components based on our design and technology requirements and under our quality control specifications and final inspection process. Lighting Products We design, assemble and sell lighting fixtures and systems for general lighting applications, including commercial, residential and industrial lighting.
Of these 212 issued patents, 135 expire between 2024 and 2028, 62 expire between 2029 and 2033, 11 expire between 2034 and 2040, and four expire after 2040. Forty-two of our issued patents are design patents and one of our pending patents is a design patent.
Of these 192 issued patents, 124 expire between 2025 and 2029, 47 expire between 2030 and 2034, 18 expire between 2035 and 2041, and three expire after 2041. Thirty-four of our issued patents are design patents and one of our pending patents is a design patent.
There can be no assurance that we will be able to appoint an additional independent director timely or implement the plan successfully, regain and maintain compliance with the continued listing requirements or that our common stock will not be delisted from NASDAQ in the future.
However, our stockholders equity has again declined below the $2,500,000 minimum as of August 31, 2024, so we may receive another deficiency notice. There can be no assurance that we will be able to regain or maintain compliance with Nasdaq’s continued listing requirements or that our common stock will not be delisted from Nasdaq in the future.
Competition We believe that our advanced technology helps us to compete in the innovative, intensely competitive and rapidly changing market of LED design and manufacturing. To succeed, however, we must continue to manufacture products that meet the demanding requirements of high performance at low costs.
In addition, we are partnering with a Japanese manufacturer developing new sensors such as dot projectors and photoplethysmogram (PPG) sensors. Competition We believe that our advanced technology helps us to compete in the innovative, intensely competitive and rapidly changing market of LED design and manufacturing.
General Risks Epidemics, pandemics, and other outbreaks (including the coronavirus (COVID-19) pandemic) could disrupt the Company’s operations and adversely affect its business, results of operations, and cash flows.
General Risks Epidemics, pandemics, and other outbreaks could disrupt the Company’s operations and adversely affect its business, results of operations, and cash flows. Epidemics, pandemics, and other outbreaks of an illness, disease, or virus have adversely affected, and could adversely affect in the future, workforces, customers, economies, and financial markets globally, potentially leading to economic downturns.
Lighting Products We design, assemble and sell lighting fixtures and systems for general lighting applications, including commercial, residential and industrial lighting. Our lighting products consist primarily of LED luminaries and LED retrofits. Our lighting product customers are primarily ODMs of lighting products and the end-users of lighting devices.
Our lighting products consist primarily of LED luminaries and LED retrofits. Our lighting product customers are primarily ODMs of lighting products and the end-users of lighting devices. Revenues from sales of our lighting products represented 4% and 5% of our revenues for the years ended August 31, 2024 and 2023, respectively.
We are also developing various packaging technologies, such as component cost reducing Advanced Packaging Technology called CSP, Multi‑Channel Emitters (MCE) and Chip‑On‑Board (COB).
We are also developing various packaging technologies, such as component cost reducing Advanced Packaging Technology called CSP, Multi‑Channel Emitters (MCE) and Chip‑On‑Board (COB). Discussed in further detail below, our newly developed wafer level package technology allows us to interconnect photonic devices together with a photodetector and/or device driver Integrated Circuit (IC) without using an interposer in one thin-format package.
In 2019, we introduced multi-pixel Mini-LED package (16 RGB pixels in one package) for fine pitch Mini-LED display market and expanded our UVC portfolio to disinfection markets. Our packaging process includes chip bonding, wire bonding, phosphor coating, encapsulation, scribing, dicing and testing.
Our packaging process includes chip bonding, wire bonding, phosphor coating, encapsulation, scribing, dicing and testing. We may, from time to time, establish packaging operations in selected markets for sale to distributors and end-customers in such markets.
Removed
While the COVID-19 pandemic did not have a material impact on our supply chain, it has the potential to have a meaningful impact on our supply chain if the factories that produce our raw materials and components are disrupted, temporarily closed or experience worker shortages .
Added
Sensor Development with Japanese Partner We are working with a Japanese company developing new sensors for smartphones, smartwatches, and Augmented Reality/ Virtual Reality glasses, utilizing our newly-developed wafer level package technology. This technology allows us to interconnect photonic devices together with photodetectors and/or device drivers IC without using an interposer in one package having thin format.
Removed
For the years ended August 31, 2023 and 2022, our top ten customers collectively accounted for 91% and 88%, respectively, of our revenues.
Added
Given that we are operating in a rapidly changing industry, our sales in specific markets may fluctuate from quarter to quarter.
Removed
For the years ended August 31, 2023 and 2022, our top ten customers collectively accounted for approximately 91% and 88%, respectively, of our revenues.
Added
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report we file with, or furnish to, the SEC, and all website addresses in this report are intended to be inactive textual references only. 10 Table of Contents I tem 1A.
Removed
If we do not regain compliance with the audit committee requirements by the period provided, NASDAQ will notify the Company that its common stock will be delisted. We intend to appoint a replacement director for the vacancy on its audit committee.
Added
In 2024, sales decreased but gross margin increased due to higher other revenues rather than LED chips, LED components and lighting products sales compared to 2023.
Added
On July 3, 2024, we appointed Dr. Chris Chang Yu as a director and member of our audit committee, effective immediately. With the appointment of Dr. Yu to our audit committee, we once again meet the requirements of Nasdaq Listing Rule 5605(c)(2)(A), being comprised of three independent members.
Added
In January 2024, we converted the total principal and accrued interest of our outstanding convertible unsecured promissory notes, in an aggregate amount of $1,608,848, to 1,228,128 shares of our common stock at a conversion price of $1.31 per share.
Added
We also issued 305,343 shares of our common stock at a price of $1.31 per share in January 2024 to repay $400,000 of (1) accrued interest and, once repaid in full, (2) principal, on our existing Loan Agreement with Simplot Taiwan Inc.
Added
In February 2024, we prepaid $800,000 of principal on our existing Loan Agreement with Trung Doan by delivering 629,921 shares of our common stock to Mr. Doan, based on the closing price of $1.27 per share on February 8, 2024. Based on these transactions, Nasdaq issued a conditional compliance letter on January 18, 2024.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. P roperties The following are significant manufacturing and office facilities that we own or lease as of August 31, 2023: • We own a four-story building located in Hsinchu Science Park, Taiwan. We occupy approximately 183 thousand square feet of the building, and we lease approximately 55 thousand square feet of space to a third-party tenant.
Biggest changeItem 2. P roperties The following are significant manufacturing and office facilities that we own or lease as of August 31, 2024: • We own a four-story building located in Hsinchu Science Park, Taiwan. We occupy approximately 183 thousand square feet of the building, and we lease approximately 55 thousand square feet of space to a third-party tenant.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are directly or indirectly involved from time to time and may be named in various other claims or legal proceedings arising in the ordinary course of our business or otherwise. There were no material pending legal proceedings or claims as of August 31, 2023. Item 4. Mine Saf ety Disclosures Not applicable. 25 Table of Contents PART II.
Biggest changeWe are directly or indirectly involved from time to time and may be named in various other claims or legal proceedings arising in the ordinary course of our business or otherwise. There were no material pending legal proceedings or claims as of August 31, 2024. Item 4. Mine Saf ety Disclosures Not applicable. 25 Table of Contents PART II.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePurchases of Equity Securities by the Issuer and Affiliated Purchasers We did not make any repurchases of our common stock, and no purchases of common stock were made on our behalf during the fourth quarter of our fiscal 2023. Item 6. [ Reserved] 26 Table of Contents
Biggest changeIssuer Purchases of Equity Securities We did not make any repurchases of our common stock, and no purchases of common stock were made on our behalf during the fourth quarter of our fiscal 2024.
There were 53 holders of record of our common stock as of November 20, 2023. Dividends We have never declared or paid any cash dividends on our common stock.
There were 50 holders of record of our common stock as of November 20, 2024. Dividends We have never declared or paid any cash dividends on our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe historical results presented below are not necessarily indicative of the results that may be expected for any future period: Years Ended August 31, 2023 2022 % of % of $ Revenues $ Revenues (in thousands) Consolidated Statement of Operations Data: Revenues, net $ 5,979 100 % $ 7,051 100 % Cost of revenues 4,972 83 % 5,654 80 % Gross profit 1,007 17 % 1,397 20 % Operating expenses: Research and development 1,353 23 % 1,484 21 % Selling, general and administrative 3,058 51 % 3,309 47 % Gain on disposals of long-lived assets, net — — % (196 ) (3 ) % Total operating expenses 4,411 74 % 4,597 65 % Loss from operations (3,404 ) (57 ) % (3,200 ) (45 ) % Other income (expenses): Investments loss (1 ) — % — — % Interest expenses, net (287 ) (5 ) % (369 ) (5 ) % Other income, net 1,054 18 % 1,485 21 % Foreign currency transaction (loss) gain, net (52 ) (1 ) % (642 ) (9 ) % Total other income, net 714 12 % 474 7 % Loss before income taxes (2,690 ) (45 ) % (2,726 ) (38 ) % Income tax expense — — — — Net loss (2,690 ) (45 ) % (2,726 ) (38 ) % Less: Net loss attributable to noncontrolling interests — — % 18 — % Net loss attributable to SemiLEDs stockholders $ (2,690 ) (45 ) % $ (2,744 ) (38 ) % Year Ended August 31, 2023 Compared to Year Ended August 31, 2022 Years Ended August 31, 2023 2022 % of % of Change Change $ Revenues $ Revenues $ % (in thousands) LED chips $ 111 2 % $ 166 2 % $ (55 ) (33 ) % LED components 3,345 56 % 4,872 69 % (1,527 ) (31 ) % Lighting products 321 5 % 533 8 % (212 ) (40 ) % Other revenues (1) 2,202 37 % 1,480 21 % 722 49 % Total revenues, net 5,979 100 % 7,051 100 % (1,072 ) (15 ) % Cost of revenues 4,972 83 % 5,654 80 % (682 ) (12 ) % Gross profit $ 1,007 17 % $ 1,397 20 % $ (390 ) (28 ) % (1) Other includes primarily revenues attributable to the sale of epitaxial wafers, scraps and raw materials, the provision of services and the lease of manufacturing as well as research and development facilities. 35 Table of Contents Revenues, net Our revenues decreased by 15% from $7.1 million for the year ended August 31, 2022 to $6.0 million for the year ended August 31, 2023.
Biggest changeThe historical results presented below are not necessarily indicative of the results that may be expected for any future period: Years Ended August 31, 2024 2023 % of % of $ Revenues $ Revenues (in thousands) Consolidated Statement of Operations Data: Revenues, net $ 5,183 100 % $ 5,979 100 % Cost of revenues 4,130 80 % 4,972 83 % Gross profit 1,053 20 % 1,007 17 % Operating expenses: Research and development 1,160 22 % 1,353 23 % Selling, general and administrative 2,891 56 % 3,058 51 % Gain on disposals of long-lived assets, net (49 ) (1 ) % - — % Total operating expenses 4,002 77 % 4,411 74 % Loss from operations (2,949 ) (57 ) % (3,404 ) (57 ) % Other income (expenses): Investments loss (3 ) — % (1 ) — % Interest expenses, net (247 ) (5 ) % (287 ) (5 ) % Other income, net 1,181 23 % 1,054 18 % Foreign currency transaction loss, net (13 ) — % (52 ) (1 ) % Total other income, net 918 18 % 714 12 % Loss before income taxes (2,031 ) (39 ) % (2,690 ) (45 ) % Income tax expense — — — — Net loss (2,031 ) (39 ) % (2,690 ) (45 ) % Less: Net income attributable to noncontrolling interests 5 — % — — % Net loss attributable to SemiLEDs stockholders $ (2,036 ) (39 ) % $ (2,690 ) (45 ) % Year Ended August 31, 2024 Compared to Year Ended August 31, 2023 Years Ended August 31, 2024 2023 % of % of Change Change $ Revenues $ Revenues $ % (in thousands) LED chips $ 93 2 % $ 111 2 % $ (18 ) (16 ) % LED components 2,656 51 % 3,345 56 % (689 ) (21 ) % Lighting products 212 4 % 321 5 % (109 ) (34 ) % Other revenues (1) 2,222 43 % 2,202 37 % 20 1 % Total revenues, net 5,183 100 % 5,979 100 % (796 ) (13 ) % Cost of revenues 4,130 80 % 4,972 83 % (842 ) (17 ) % Gross profit $ 1,053 20 % $ 1,007 17 % $ 46 5 % (1) Other includes primarily revenues attributable to the sale of epitaxial wafers, scraps and raw materials, the provision of services and the lease of manufacturing as well as research and development facilities. 35 Table of Contents Revenues, net Our revenues decreased by 13% from $6.0 million for the year ended August 31, 2023 to $5.2 million for the year ended August 31, 2024.
When the global economy slows or a financial crisis occurs, consumer and government confidence declines, with levels of government grants and subsidies for LED adoption and consumer spending likely to be adversely impacted. Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States, Germany, and Japan.
When the global economy slows or a financial crisis occurs, consumer and government confidence declines, with levels of government grants and subsidies for LED adoption and consumer spending likely to be adversely impacted. Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States, and Japan.
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 Netherlands, Taiwan, the United States, Norway and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets.
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 Netherlands, Taiwan, the United States, and Japan. We also sell our “Enhanced Vertical,” or EV, LED product series in blue, white, green and UV in selected markets.
The significant assumptions used in determining the estimated undiscounted cash flows for the LED chips and components asset group were revised to reflect the new operation status. Based on the assessment, the expected undiscounted cash flows to be generated by this asset group exceeded its carrying value. Consequently, no asset impairment was recognized during the year ended August 31, 2023.
The significant assumptions used in determining the estimated undiscounted cash flows for the LED chips and components asset group were revised to reflect the new operation status. Based on the assessment, the expected undiscounted cash flows to be generated by this asset group exceeded its carrying value. Consequently, no asset impairment was recognized during the year ended August 31, 2024.
Income Tax Expense (Benefit) Our effective tax rate is expected to be approximately zero for both fiscal year 2023 and 2022, 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.
Income Tax Expense (Benefit) Our effective tax rate is expected to be approximately zero for both fiscal year 2024 and 2023, since Taiwan SemiLEDs incurred losses, and because we provided a full valuation allowance on all deferred tax assets, which consisted primarily of net operating loss carryforwards and foreign investment loss.
Non-controlling interests represented 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd. for both the years ended August 31, 2023 and 2022. Liquidity and Capital Resources This section includes a discussion and analysis of our cash requirements, contingencies, sources and uses of cash, operations, working capital and long-term assets and liabilities.
Non-controlling interests represented 2.63% equity interest in Taiwan Bandaoti Zhaoming Co., Ltd. for both the years ended August 31, 2024 and 2023. Liquidity and Capital Resources This section includes a discussion and analysis of our cash requirements, contingencies, sources and uses of cash, operations, working capital and long-term assets and liabilities.
A majority of our inventory write‑downs during the years ended August 31, 2023 and 2022 was related to finished goods and work in process, primarily as a result of obsolescence. 32 Table of Contents Useful Life of Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
A majority of our inventory write‑downs during the years ended August 31, 2024 and 2023 was related to finished goods and work in process, primarily as a result of obsolescence. 32 Table of Contents Useful Life of Property, Plant and Equipment Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
Due to the excess capacity charges that we have suffered for a few years, considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of a certain level of our idle equipment. 30 Table of Contents Other Income (Expense) Interest expenses, net.
Due to the excess capacity charges that we have suffered for many years, considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of a certain level of our idle equipment. 30 Table of Contents Other Income (Expense) Interest expenses, net.
In the table below and throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the following consolidated statement of operations data for the years ended August 31, 2023 and 2022 has been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10‑K.
In the table below and throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” the following consolidated statement of operations data for the years ended August 31, 2024 and 2023 has been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10‑K.
Utilization of these net operating losses carryforwards may be subject to an annual limitation due to applicable provisions of the Internal Revenue Code and local tax laws if we have experienced an “ownership change” in the past, or if an ownership change occurs in the future. 37 Table of Contents As of August 31, 2023, we had total foreign net operating loss carryforwards of $72 million, arising primarily from certain of our consolidated and majority owned subsidiaries in Taiwan.
Utilization of these net operating losses carryforwards may be subject to an annual limitation due to applicable provisions of the Internal Revenue Code and local tax laws if we have experienced an “ownership change” in the past, or if an ownership change occurs in the future. 37 Table of Contents As of August 31, 2024, we had total foreign net operating loss carryforwards of $37 million, arising primarily from certain of our consolidated and majority owned subsidiaries in Taiwan.
Therefore, our ability to continue to innovate and offer competitive products that meet our customers’ specifications and pricing requirements, such as higher efficacy LED products at lower costs, will have a material influence on our ability to improve our revenues and product margins, although in the near term the introduction of such higher performance LED products may further reduce the selling prices of our existing products or render them obsolete. • Changes in our product mix.
Therefore, our ability to continue to innovate and offer competitive products that meet our customers’ specifications and pricing requirements, such as higher efficacy 27 Table of Contents LED products at lower costs, will have a material influence on our ability to improve our revenues and product margins, although in the near term the introduction of such higher performance LED products may further reduce the selling prices of our existing products or render them obsolete. • Changes in our product mix.
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 1.815% currently), and was exclusively used to repay the existing loans.
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 corporate income tax rate in Taiwan is 20% for the year ended August 31, 2023 and 2022. Corporate income taxes payable, however, are subject to an alternative minimum tax. The Taiwan government enacted the Taiwan Alternative Minimum Tax Act, or the AMT Act, on January 1, 2006.
The corporate income tax rate in Taiwan is 20% for the year ended August 31, 2024 and 2023. Corporate income taxes payable, however, are subject to an alternative minimum tax. The Taiwan government enacted the Taiwan Alternative Minimum Tax Act, or the AMT Act, on January 1, 2006.
We considered both positive and negative evidence, including forecasts of future taxable income and our cumulative loss position, and continued to report a full valuation allowance against our deferred tax assets as of both August 31, 2023 and 2022.
We considered both positive and negative evidence, including forecasts of future taxable income and our cumulative loss position, and continued to report a full valuation allowance against our deferred tax assets as of both August 31, 2024 and 2023.
However, in response to controlling capital costs and maintaining financial flexibility, our management continues to 40 Table of Contents monitor prices and, consistent with its existing contractual commitments, may decrease its activity level and capital expenditures as appropriate. Accounting Pronouncements Not Yet Adopted Please refer to ‘Summary of Significant Accounting Policies Recent Accounting Pronouncements’ for more details. Item 7A.
However, in response to controlling capital costs and maintaining financial flexibility, our management continues to monitor prices and, consistent with its existing contractual commitments, may decrease its activity level and capital expenditures as appropriate. Accounting Pronouncements Not Yet Adopted Please refer to ‘Summary of Significant Accounting Policies Recent Accounting Pronouncements’ for more details. Item 7A.
For the year ended August 31, 2023, lower than projected sales of our LED products and lower market capitalization compared to our consolidated net book values again indicated potential impairment of our long‑lived assets.
For the year ended August 31, 2024, lower than projected sales of our LED products and lower market capitalization compared to our consolidated net book values again indicated potential impairment of our long‑lived assets.
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 2.195% currently) and is available for operating capital.
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.
Because most of our subsidiaries in Taiwan incurred losses before income tax for both our fiscal year 2023 and 2022, we do not expect to pay such taxes on undistributed earnings.
Because most of our subsidiaries in Taiwan incurred losses before income tax for both our fiscal year 2024 and 2023, we do not expect to pay such taxes on undistributed earnings.
Other income for the years ended August 31, 2023 and 2022 primarily consists of rental income from the lease of spare space in our Hsinchu building. Foreign currency transaction gain (loss), net.
Other income for the years ended August 31, 2024 and 2023 primarily consists of rental income from the lease of spare space in our Hsinchu building. Foreign currency transaction gain (loss), net.
As of August 31, 2023, we had U.S. federal net operating loss (“NOLs”) carryforwards of $3 million, which will expire in various amounts beginning in our fiscal 2025. NOLs generated in tax years prior to August 31, 2018 can be carried forward for twenty years, whereas NOLs generated after August 31, 2018 can be carried forward indefinitely.
As of August 31, 2024, we had U.S. federal net operating loss (“NOLs”) carryforwards of $4.3 million, which will expire in various amounts beginning in our fiscal 2025. NOLs generated in tax years prior to August 31, 2018 can be carried forward for twenty years, whereas NOLs generated after August 31, 2018 can be carried forward indefinitely.
For example, some of our competitors have in the past reduced their average selling prices, and the resulting competitive pricing pressures have caused us to similarly reduce our prices, accelerating the decline in our revenues and the gross 27 Table of Contents margin of our products. When prices decline, we must also write down the value of our inventory.
For example, some of our competitors have in the past reduced their average selling prices, and the resulting competitive pricing pressures have caused us to similarly reduce our prices, accelerating the decline in our revenues and the gross margin of our products. When prices decline, we must also write down the value of our inventory.
We recognized a net foreign currency transaction loss of $52 thousand and a net foreign currency transaction loss of $642 thousand for the years ended August 31, 2023 and 2022, respectively, primarily due to the appreciation of the U.S. dollar against the NT dollar from bank deposits and accounts payables held by Taiwan SemiLEDs and Taiwan Bandaoti Zhaoming Co., Ltd. in currency other than the functional currency of such subsidiaries.
We recognized a net foreign currency transaction loss of $13 thousand and a net foreign currency transaction loss of $52 thousand for the years ended August 31, 2024 and 2023, respectively, primarily due to the appreciation of the U.S. dollar against the NT dollar from bank deposits and accounts payables held by Taiwan SemiLEDs and Taiwan Bandaoti Zhaoming Co., Ltd. in currency other than the functional currency of such subsidiaries.
On May 25, 2020, each of the Holders converted $300,000 of the Notes into 100,000 shares of our common stock. On May 26, 2021, the Notes were extended with the same terms and interest rate for one year and a maturity date of May 30, 2022.
On May 25, 2020, each of the Holders converted $300,000 of the Notes into 100,000 shares of our common stock. On May 26, 2021, the Notes were extended with the 39 Table of Contents same terms and interest rate for one year and a maturity date of May 30, 2022.
We recognized foreign currency transaction loss of $52 thousand and $642 thousand for the years ended August 31, 2023 and 2022, respectively, primarily due to the appreciation of the U.S. dollar against the NT dollar from bank deposits and accounts payable held by Taiwan SemiLEDs and Taiwan Bandaoti Zhaoming Co., Ltd. in currency other than the functional currency of such subsidiaries.
We recognized foreign currency transaction loss of $13 thousand and $52 thousand for the years ended August 31, 2024 and 2023, respectively, primarily due to the appreciation of the U.S. dollar against the NT dollar from bank deposits and accounts payable held by Taiwan SemiLEDs and Taiwan Bandaoti Zhaoming Co., Ltd. in currency other than the functional currency of such subsidiaries.
Therefore, dividends received from our subsidiaries in Taiwan, if any, will be subjected to withholding tax under Taiwan law. As of August 31, 2023, we had total foreign net operating loss carryforwards of $72 million, arising primarily from certain of our consolidated and majority owned subsidiaries in Taiwan, which will expire in various amounts in future years.
Therefore, dividends received from our subsidiaries in Taiwan, if any, will be subjected to withholding tax under Taiwan law. As of August 31, 2024, we had total foreign net operating loss carryforwards of $37 million, arising primarily from certain of our consolidated and majority owned subsidiaries in Taiwan, which will expire in various amounts in future years.
When average selling prices drop, as they did in recent years, inventory write‑downs to net realizable values may also result. Our customers consist primarily of packagers, ODMs and end‑customers. Our revenues attributable to our ten largest customers accounted for 91% and 88% of our revenues for the years ended August 31, 2023 and 2022, respectively.
When average selling prices drop, as they did in recent years, inventory write‑downs to net realizable values may also result. Our customers consist primarily of packagers, ODMs and end‑customers. Our revenues attributable to our ten largest customers accounted for 91% of our revenues for the years ended August 31, 2024 and 2023.
On January 8, 2019, we entered into loan agreements with each of our Chairman and Chief Executive Officer and our largest shareholder, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual interest rate of 8%.
On January 8, 2019, we entered into loan agreements with each of the Chairman and Chief Executive Officer and the largest shareholder of the Company, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual interest rate of 8%.
If we are not able to generate positive cash flows from operations, we may need to consider alternative financing sources and seek additional funds through public or private equity financings or from other sources, or refinance or extend the maturity of our indebtedness, to support our working capital requirements or for other purposes.
If we are not able to generate positive cash flows from operations, we may need to consider alternative financing sources and seek additional funds through public or private equity financings or from other sources, or refinance our indebtedness, to support our working capital requirements or for other purposes.
On November 25, 2019 and on December 10, 2019, we issued the Notes to J.R. Simplot Company, our largest shareholder, and Trung Doan, our Chairman and Chief Executive Officer, (together, the “Holders”) with a principal sum of $1.5 million and $500 thousand, respectively, and an annual interest rate of 3.5%.
On November 25, 2019 and on December 10, 2019, we issued convertible unsecured promissory notes (the “Notes”) to J.R. Simplot Company, its largest shareholder, and Trung Doan, our Chairman and Chief Executive Officer, (together, the “Holders”) with a principal sum of $1.5 million and $500 thousand, respectively, and an annual interest rate of 3.5%.
Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States and Japan. Net revenues generated from these countries, in the aggregate, accounted for 89% and 83% of our net revenues for the years ended August 31, 2023 and 2022, respectively.
Our revenues have been concentrated in a few select markets, including the Netherlands, Taiwan, the United States and Japan. Net revenues generated from these countries, in the aggregate, accounted for 91% and 89% of our net revenues for the years ended August 31, 2024 and 2023, respectively.
Interest expense consists primarily of interest on our convertible notes and long‑term borrowings and/or short‑term lines of credit with certain banks in Taiwan as well as with our Chairman and largest stockholder. We had long‑term debt totaling $6.4 million and $6.9 million as of August 31, 2023 and 2022, respectively. Other income, net.
Interest expense consists primarily of interest on our convertible notes and long‑term borrowings and/or short‑term lines of credit with certain banks in Taiwan as well as with our Chairman and largest stockholder. We had long‑term debt totaling $3.7 million and $6.4 million as of August 31, 2024 and 2023, respectively. Other income, net.
Inventory write‑downs totaled $627 thousand and $807 thousand for the years ended August 31, 2023 and 2022, respectively. A majority of our inventory write-downs during the years ended August 31, 2023 and 2022 was related to finished goods and work in process, primarily as a result of obsolescence.
Inventory write‑downs totaled $411 thousand and $627 thousand for the years ended August 31, 2024 and 2023, respectively. A majority of our inventory write-downs during the years ended August 31, 2024 and 2023 was related to finished goods and work in process, primarily as a result of obsolescence.
Sources and Uses of Cash As of August 31, 2023 and 2022, we had cash and cash equivalents of $2.6 million and $4.3 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.
Sources and Uses of Cash As of August 31, 2024 and 2023, we had cash and cash equivalents of $1.7 million and $2.6 million, respectively, which were predominately held in U.S. dollar denominated demand deposits and/or money market funds. We require cash to fund our operating expenses, working capital requirements and service our debts, including principal and interest.
These loans are secured by an $82 thousand (NT$2.5 million) security deposit and a first priority security interest on the Company’s headquarters building. • 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 August 31, 2023, our outstanding balance on this note payable was approximately $1.1 million. 38 Table of Contents • 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 August 31, 2023, our outstanding balance on this note payable was approximately $0.7 million.
These loans are secured by an $78 thousand (NT$2.5 million) security deposit and a first priority security interest on the Company’s headquarters building. • 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 August 31, 2024, our outstanding balance on this note payable was approximately $820 thousand. 38 Table of Contents • 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 August 31, 2024, our outstanding balance on this note payable was approximately $503 thousand .
Capital Expenditures We had capital expenditures of $200 thousand and $280 thousand for the years ended August 31, 2023 and 2022, respectively. Our capital expenditures consisted primarily of the purchases of machinery and equipment, construction in progress, prepayments for our manufacturing facilities and prepayments for equipment purchases.
Capital Expenditures We had capital expenditures of $123 thousand and $200 thousand for the years ended August 31, 2024 and 2023, respectively. Our capital expenditures consisted primarily of the purchases of machinery and equipment, construction in progress, prepayments for our manufacturing facilities and prepayments for equipment purchases.
Revenues attributable to other revenues represented 37% and 21% of our revenues for the years ended August 31, 2023 and 2022, respectively. The increase in other revenues was primarily due to the provision of services and the sale of raw materials.
Revenues attributable to other revenues represented 43% and 37% of our revenues for the years ended August 31, 2024 and 2023, respectively. The increase in other revenues was primarily due to the provision of services and the sale of raw materials.
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. Bad debt expenses were recognized $0 thousand and $126 thousand during the years ended August 31, 2023 and 2022, respectively.
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 years ended August 31, 2024 and 2023.
Net Income (Loss) Attributable to Noncontrolling Interests Years Ended August 31, 2023 2022 % of % of $ Revenues $ Revenues (in thousands) Net Income (Loss) attributable to noncontrolling interests $ — — % $ 18 — % We recognized zero net income attributable to non-controlling interests and a net loss attributable to non-controlling interests of $18 thousand for the year ended August 31, 2023 and 2022, respectively, which was attributable to the share of the net losses of Taiwan Bandaoti Zhaoming Co., Ltd. held by the non-controlling holders.
Net Income Attributable to Noncontrolling Interests Years Ended August 31, 2024 2023 % of % of $ Revenues $ Revenues (in thousands) Net Income attributable to noncontrolling interests $ 5 — % $ — — % We recognized $5 thousand net income attributable to non-controlling interests and zero net loss attributable to non-controlling interests for the year ended August 31, 2024 and 2023, respectively, which was attributable to the share of the net income of Taiwan Bandaoti Zhaoming Co., Ltd. held by the non-controlling holders.
As of August 31, 2023 and 2022, we recognized full valuation allowances of $23.8 million and $22.5 million, respectively, on our net deferred tax assets to reflect uncertainties related to our ability to utilize these deferred tax assets, which consist primarily of certain net operating loss carryforwards and foreign investment loss.
As of August 31, 2024 and 2023, we recognized full valuation allowances of $13.6 million and $23.8 million, respectively, on our net deferred tax assets to reflect uncertainties related to our ability to utilize these deferred tax assets, which consist primarily of certain net operating loss carryforwards and foreign investment loss.
For the years ended August 31, 2023 and 2022, sales to our three largest customers, in the aggregate, accounted for 53% and 59% of our revenues, respectively. • Intellectual property issues.
For the years ended August 31, 2024 and 2023, sales to our three largest customers, in the aggregate, accounted for 61% and 53% of our revenues, respectively. • Intellectual property issues.
As of August 31, 2023 and August 31, 2022, the outstanding principal of these notes totaled $1.4 million. Working Capital We have incurred significant losses since inception, including net losses attributable to SemiLEDs stockholders of $2.7 million both during the years ended August 31, 2023 and 2022.
As of August 31, 2024 and 2023, the outstanding principal of these notes totaled zero and $1.4 million, respectively. Working Capital We have incurred significant losses since inception, including net losses attributable to SemiLEDs stockholders of $2.0 million and $2.7 million during the years ended August 31, 2024 and 2023.
Our long-term debt, which consisted of NT dollar denominated long-term notes, convertible unsecured promissory notes, and loans from our Chairman and our largest shareholder, totaled $6.4 million and $6.9 million as of August 31, 2023 and 2022, respectively. Our NT dollar denominated long-term notes, totaled $1.8 million and $2.4 million as of August 31, 2023 and 2022, respectively.
Our long-term debt, which consisted of NT dollar denominated long-term notes, convertible unsecured promissory notes, and loans from our Chairman and our largest shareholder, totaled $3.7 million and $6.4 million as of August 31, 2024 and 2023, respectively. Our NT dollar denominated long-term notes, totaled $1.3 million and $1.8 million as of August 31, 2024 and 2023, respectively.
Inventory write‑downs to estimated net realizable values for the years ended August 31, 2023 and 2022 were $627 thousand and $807 thousand, respectively.
Inventory write‑downs to estimated net realizable values for the years ended August 31, 2024 and 2023 were $411 thousand and $627 thousand, respectively.
Property, plant and equipment pledged as collateral for our notes payable were $2.3 million and $2.8 million as of August 31, 2023 and 2022, respectively.
Property, plant and equipment pledged as collateral for our notes payable were $2.0 million and $2.3 million as of August 31, 2024 and 2023, respectively.
Net cash used in operating activities for the year ended August 31, 2023 was $984 thousand. As of August 31, 2023, we had cash and cash equivalents of $2.6 million. We have undertaken actions to decrease losses incurred and implemented cost reduction programs in an effort to transform the Company into a profitable operation.
Net cash used in operating activities for the year ended August 31, 2024 was $365 thousand. As of August 31, 2024, we had cash and cash equivalents of $1.7 million. We have undertaken actions to decrease losses incurred and implemented cost reduction programs in an effort to transform the Company into a profitable operation.
As of August 31, 2023 and 2022, we had cash and cash equivalents of $2.6 million and $4.3 million, respectively, which consisted of time deposits with initial maturity of greater than three months but less than one year.
As of August 31, 2024 and 2023, we had cash and cash equivalents of $1.7 million and $2.6 million, respectively, which consisted of time deposits with initial maturity of greater than three months but less than one year.
On June 6, 2023, we entered into the Third Amendment to the Convertible Unsecured Promissory Notes ("Third Amendments") to amend the Notes to (i) extend the maturity date from May 30, 2023 to May 30, 2024, and (ii) change the conversion price from $3.00 to $2.046 per share. All other terms and conditions of the Notes remain the same.
On June 6, 2023, we entered into the Third Amendment to the Notes (the “Third Amendments”) to amend the Notes to (i) extend the maturity date from May 30, 2023 to May 30, 2024, and (ii) change the conversion price from $3.00 to $2.046 per share. All other terms and conditions of the Notes remained the same.
Inventory write‑downs totaled $627 thousand and $807 thousand for the years ended August 31, 2023 and 2022, respectively.
Inventory write‑downs totaled $411 thousand and $627 thousand for the years ended August 31, 2024 and 2023, respectively.
Revenues attributable to the sales of our LED chips represented 2% of our revenues for both the years ended August 31, 2023 and 2022, and the slight decrease was primarily due to a lower volumes of LED chips sold in the fiscal year ended August 31, 2023.
Revenues attributable to the sales of our LED chips were $93 thousand and $111 thousand, representing 2% of our revenues for both the years ended August 31, 2024 and 2023. The slight decrease was primarily due to a lower volumes of LED chips sold in the fiscal year ended August 31, 2024.
We recognized a gain of $0 and $196 thousand on the disposal of long-lived assets for the years ended August 31, 2023 and 2022, respectively.
We recognized a gain of $49 thousand and zero on the disposal of long-lived assets for the years ended August 31, 2024 and 2023, respectively.
Interest expenses, net which primarily consisted of accrued interest on convertible notes, NT dollar denominated long-term notes and $3.2 million of loans with our Chairman and Chief Executive Officer and our largest shareholder. The decrease in interest expenses, net was insignificant. Other income, net.
Interest expenses, net primarily consisted of accrued interest payments on convertible notes, NT dollar denominated long-term notes and $2.4 million of loans with our Chairman and Chief Executive Officer and our largest shareholder. The decrease in interest expense, net was primarily due to lower outstanding debt. Other income, net.
Our cash and cash equivalents were $2.6 million and $4.3 million for August 31, 2023 and 2022, respectively. We have implemented actions to accelerate operating cost reductions and improve operational efficiencies.
Our cash and cash equivalents were $1.7 million and $2.6 million as of August 31, 2024 and 2023, respectively. We have implemented actions to accelerate operating cost reductions and improve operational efficiencies.
On August 31, 2023 the exchange rate was 31.86 NT dollars to one U.S. dollar. On November 20, 2023, the exchange rate was 31.64 NT dollars to one U.S. dollar.
On August 31, 2024 the exchange rate was 31.94 NT dollars to one U.S. dollar. On November 20, 2024, the exchange rate was 32.5 NT dollars to one U.S. dollar.
Our research and development expenses decreased from $1.5 million for the year ended August 31, 2022 to $1.4 million for the year ended August 31, 2023. The slight decrease was primarily due to a $30 thousand decrease in materials and supplies used in research and development, and a $52 thousand decrease in payroll expense. Selling, general and administrative.
Our research and development expenses were $1.2 million and $1.4 million for the year ended August 31, 2024 and 2023, respectively. The decrease was primarily due to a $124 thousand decrease in payroll expense and a $64 thousand decrease in materials and supplies. Selling, general and administrative.
The decrease in revenues was driven primarily by a $1.5 million decrease in revenues attributable to sales of LED components and a $259 thousand decrease in revenues attributable to the sales of LED chips and lighting products, offset by a $706 thousand increase in other revenues.
The decrease in revenues was driven primarily by a $689 thousand decrease in sales of LED components, a $109 thousand decrease in sales of LED lighting products and a $18 thousand decrease in sales of LED chips, offset by a $20 thousand increase in other revenues.
Cost of Revenues Our cost of revenues decreased by 12% from $5.7 million for the year ended August 31, 2022 to $5.0 million for the year ended August 31, 2023. The decrease in cost of revenues was primarily due to the decrease of volumes sold in LED components and lighting products.
Cost of Revenues Our cost of revenues decreased by 17% from $5.0 million for the year ended August 31, 2023 to $4.1 million for the year ended August 31, 2024. The decrease in cost of revenues was primarily due to a decrease in the volume of products sold.
Our selling, general and administrative expenses decreased from $3.3 million for the year ended August 31, 2022 to $3.1 million for the year ended August 31, 2023.
Our selling, general and administrative expenses were $2.9 million and $3.1 million for the years ended August 31, 2024 and 2023, respectively.
Other Income (Expenses) Years Ended August 31, 2023 2022 % of % of $ Revenues $ Revenues (in thousands) Interest expenses, net $ (287 ) (5 ) % $ (369 ) (5 ) % Other income, net 1,054 18 % 1,485 21 % Foreign currency transaction (loss) gain, net (52 ) (1 ) % (642 ) (9 ) % Total other income, net $ 714 12 % $ 474 7 % Interest expenses, net.
Other Income (Expenses) Years Ended August 31, 2024 2023 % of % of $ Revenues $ Revenues (in thousands) Investment loss from unconsolidated entities $ (3 ) — % $ (1 ) — % Interest expenses, net (247 ) (5 ) % (287 ) (5 ) % Other income, net 1,181 23 % 1,054 18 % Foreign currency transaction loss, net (13 ) — % (52 ) (1 ) % Total other income, net $ 918 18 % $ 714 12 % Investment loss from unconsolidated entities.
Operating Expenses Years Ended August 31, 2023 2022 % of % of Change Change $ Revenues $ Revenues $ % (in thousands) Research and development $ 1,353 23 % $ 1,484 21 % $ (131 ) (9 ) % Selling, general and administrative 3,058 51 % 3,309 47 % (251 ) (8 ) % Gain on disposals of long-lived assets, net — — % (196 ) (3 ) % 196 (100 ) % Total operating expenses $ 4,411 74 % $ 4,597 65 % $ (186 ) (4 ) % Research and development.
Operating Expenses Years Ended August 31, 2024 2023 % of % of Change Change $ Revenues $ Revenues $ % (in thousands) Research and development $ 1,160 22 % $ 1,353 23 % $ (193 ) (14 ) % Selling, general and administrative 2,891 56 % 3,058 51 % (167 ) (5 ) % Gain on disposals of long-lived assets, net (49 ) (1 ) % — — % (49 ) — % Total operating expenses $ 4,002 77 % $ 4,411 74 % $ (409 ) (9 ) % Research and development.
Cash Flows (Used in) Provided by Financing Activities Net cash used in financing activities was $456 thousand for the year ended August 31, 2023, consisting primarily of $456 thousand in repayment of long-term debt.
Cash Flows Used in Financing Activities Net cash used in financing activities for the years ended August 31, 2024 and 2023 was $449 thousand and $456 thousand, respectively. The decrease in cash flows used in financing activities was primary attributable to a decrease in cash used in repayment of long-term debt of $7 thousand.
The decrease was mainly attributable to a $136 thousand decrease in bad debt expense and a $202 thousand decrease in other expenses, offset partially by an increase in payroll expense. 36 Table of Contents Gain on disposal of long ‑ lived assets, net.
The decrease was mainly attributable to a $116 thousand decrease in payroll expense, a $15 thousand decrease in insurance expenses, a $10 thousand decrease in repair and maintenance expense and a $8 thousand decrease in employee benefit. 36 Table of Contents Gain on disposal of long ‑ lived assets, net.
Revenues attributable to the sales of lighting products represented 5% and 8% of our revenues for the years ended August 31, 2023 and 2022, respectively. The decrease in revenues attributable to the sales of lighting products was mainly due to lower demand for LED luminaries and retrofits and fewer non-recurring project-based orders for LED lighting products.
Revenues attributable to the sales of lighting products were $212 thousand and $321 thousand, representing 4% and 5% of our revenues for the years ended August 31, 2024 and 2023, respectively. The decrease in sales of lighting products was mainly due to less demand for LED lighting products.
Our gross margin percentage was 17% for the year ended August 31, 2023, as compared to 20% for the year ended August 31, 2022 as a result of a decrease in sales of products with higher margin.
Gross Profit Our gross profit increased from $1.0 million for the year ended August 31, 2023 to $1.1 million for the year ended August 31, 2024. Our gross margin percentage was 20% for the year ended August 31, 2024, as compared to 17% for the year ended August 31, 2023 as a result of an increase in other revenues.
Cash Flows The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements, which are included elsewhere in this Annual Report on Form 10‑K (in thousands): Years Ended August 31, 2023 2022 Net cash used in operating activities $ (984 ) $ (1,508 ) Net cash used in investing activities $ (321 ) $ (113 ) Net cash (used in) provided by financing activities $ (456 ) $ 490 Cash Flows Used in Operating Activities Net cash used in operating activities was $984 thousand for the year ended August 31, 2023, consisting primarily of a net loss of $2.7 million and a decrease in inventory of $1.0 million, partially offset by depreciation and amortization of $1.0 million and stock-based compensation expense of $518 thousand and provision for inventory write-down of $627 thousand and accrued liabilities of $398 thousand.
Cash Flows The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements, which are included elsewhere in this Annual Report on Form 10‑K (in thousands): Years Ended August 31, 2024 2023 Net cash used in operating activities $ (365 ) $ (984 ) Net cash used in investing activities $ (101 ) $ (321 ) Net cash used in financing activities $ (449 ) $ (456 ) Cash Flows Used in Operating Activities Net cash used in operating activities for the years ended August 31, 2024 and 2023 was $365 thousand and $984 thousand, respectively.
However, there can be no assurances that our planned activities will be successful in raising additional capital, reducing losses and preserving cash.
The remaining loans with each of our Chairman and Chief Executive Officer and our largest shareholder are expected to be extended upon maturity. However, there can be no assurances that our planned activities will be successful in raising additional capital, reducing losses and preserving cash.
On January 13, 2023, the maturity date of these loans was further extended with same terms and interest rate for one year to January 15, 2024. As of August 31, 2023 and 2022, these loans totaled $3.2 million, respectively. The loans are secured by a second priority security interest on the Company's headquarters building.
On January 13, 2023, the maturity date of these loans was further extended with same terms and interest rate for one year to January 15, 2024. On January 7, 2024, J.R.
We recognized a gain of $0 thousand and $196 thousand, net on the disposal of long-lived assets for the years ended August 31, 2023 and 2022, respectively. The decrease in the fiscal year ended August 31, 2023 was primarily due to excess capacity charges that we have suffered for several years.
We recognized a gain of $49 thousand and zero on the disposal of long-lived assets for the years ended August 31, 2024 and 2023, respectively.
Net cash used in operating activities was $1.5 million for the year ended August 31, 2022, consisting primarily of a net loss of $2.7 million and a decrease in inventory of $940 thousand and accounts payable of $388 thousand, partially offset by depreciation and amortization of $938 thousand and stock-based compensation expense of $459 thousand and provision for inventory write-down of $807 thousand.
The decrease in cash flows used in operating activities was primary attributable to a decrease in net loss of $659 thousand and a decrease in inventory of $1.0 million, partially offset by an increase in depreciation and amortization of $396 thousand, stock-based compensation expense of $236 thousand and accounts payable of $447 thousand. 40 Table of Contents Cash Flows Used in Investing Activities Net cash used in investing activities for the years ended August 31, 2024 and 2023 was $101 thousand and $321 thousand, respectively.
We need to improve our liquidity, access alternative sources of funding and obtain additional equity capital or debt when necessary for our operations. In July 2021, we established an at-the-market equity program (“ATM”) that allows us to sell up to $20 million of shares of our common stock from time to time.
We need to improve our liquidity, access alternative sources of funding and obtain additional equity capital or debt when necessary for our operations. However, we may not be able to obtain such debt funding or sell equity securities on terms that are favorable to us, or at all.
Other income, net decreased from $1.5 million for the years ended August 31, 2021 to $1.1 million for the year ended August 31, 2023, primarily due to the decrease of payments received under the Patent Cross-License Agreement with CrayoNano AS. Foreign currency transaction gain (loss), net.
Other income, net increased from $1.1 million for the year ended August 31, 2023 to $1.2 million for the year ended August 31, 2024. Foreign currency transaction loss, net.
Revenues attributable to the sales of our LED components decreased by 31% from $4.9 million for the year ended August 31, 2022 to $3.3 million for the year ended August 31, 2023. The decrease in revenues attributable to sales of LED components was primarily due to an unfavorable product mix, hence with lower volume of sales of LED components products.
Revenues attributable to the sales of our LED components were $2.7 million and $3.3 million, representing 51% and 56% of our revenues for the years ended August 31, 2024 and 2023, respectively. The decrease in sales of LED components was primarily due to less volumes sold.
Net cash used in investing activities was $113 thousand for the year ended August 31, 2022, consisting primarily of the proceeds from the sales of property, plant and equipment of $196 thousand as a result of the disposal of idle machinery, partially offset by a $280 thousand in cash used in the purchase of machinery and equipment and a $13 thousand for development of intangible assets.
The decrease in cash flows used in investing activities was primary attributable to a decrease in cash used in the purchase of machinery and equipment of $78 thousand and a decrease in cash used in proceeds from sales of property, plant and equipment of $51 thousand.
During the year ended August 31, 2023, we did not sell any shares of common stock under our ATM program. 39 Table of Contents We estimate that our cash requirements to service debt and contractual obligations in fiscal 2024 is approximately $5.1 million, which we expect to fund through the issuance of additional equity under the ATM program, and other sources such as private equity funding.
In addition, we are planning to issue additional equity to our stockholders. We estimate that our cash requirements to service debt and contractual obligations in fiscal 2025 is approximately $3.4 million, which we expect to fund through the issuance of additional equity to repay principal and accrued interest and through loan extensions.
Removed
During fiscal years 2023 and 2022, we sold zero shares and 286,328 shares of our common stock pursuant to the ATM program for net proceeds of zero and $964,473, respectively. However, we may not be able to obtain such debt funding or sell equity securities on terms that are favorable to us, or at all.
Added
Due to the excess capacity charges that we have suffered for many years, and considering the risk of technological obsolescence and according to the production plan built based on our sales forecast, we disposed of certain of our idle equipment.
Removed
Gross Profit Our gross profit decreased from $1.4 million for the year ended August 31, 2022 to $1.0 million for the year ended August 31, 2023.
Added
Investment loss from unconsolidated entities increased from $1 thousand for the year ended August 31, 2023 to $3 thousand for the year ended August 31, 2024, primarily due to the increased losses of the unconsolidated entities. Interest expenses, net.
Removed
In addition, we are planning to issue additional equity to our stockholders. On July 6, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”).
Added
Simplot Company assigned and transferred all of its right, title and interest in and to the loan agreement to Simplot Taiwan Inc., in accordance with and subject to the terms and conditions of the loan agreement.
Removed
In accordance with the terms of the Sales Agreement, we may offer and sell from time to time through the Agent our common stock having an aggregate offering price of up to $20,000,000 (the “Placement Shares”).

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