What changed in this filing

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Item 1. Financial Statements

2021-07-13 compared with 2021-04-12 · 121 added, 125 removed, 359 unchanged (41% of the section changed)

1 unchanged sentence

SEMILEDS CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

Unaudited Condensed Consolidated Balance Sheets

(In thousands of U.S.

3 unchanged sentences

Restricted cash and cash equivalents

Accounts receivable (including related parties), net of allowance for doubtful accounts of $195 and $187 as of February 28, 2021 and August 31, 2020, respectively

Accounts receivable (including related parties), net of allowance for doubtful accounts of $ 200 and $ 187 as of May 31, 2021 and August 31, 2020, respectively

Prepaid expenses and other current assets

8 unchanged sentences

Accounts payable

Advance receipt toward the convertible note

Advance receipt toward convertible note

Accrued expenses and other current liabilities

8 unchanged sentences

Common stock, $ 0.0000056 par value— 7,500 shares authorized;

4,057 shares and 4,011 shares issued and outstanding as of February 28, 2021 and August 31, 2020, respectively

4,069 shares and 4,011 shares issued and outstanding as of May 31, 2021 and August 31, 2020, respectively

Additional paid-in capital

10 unchanged sentences

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Nine Months Ended

Revenues, net

9 unchanged sentences

Interest expenses, net

Other income (losses), net

Other income, net

Foreign currency transaction gain, net

Total other income, net

Income (loss) before income taxes

Loss before income taxes

Income tax expense

Net income (loss)

Net income (loss) attributable to noncontrolling interests

Net income (loss) attributable to SemiLEDs stockholders

Net income (loss) per share attributable to SemiLEDs stockholders:

Shares used in computing net income (loss) per share attributable to SemiLEDs stockholders:

Net (loss) income attributable to noncontrolling interests

Net loss attributable to SemiLEDs stockholders

Net loss per share attributable to SemiLEDs stockholders:

Basic and diluted

Shares used in computing net loss per share attributable to SemiLEDs stockholders:

Basic and diluted

See notes to unaudited condensed consolidated financial statements.

SEMILEDS CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

Unaudited Condensed Consolidated Statements of Comprehensive Loss

(In thousands of U.S.

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Net income (loss)

Nine Months Ended

Other comprehensive loss, net of tax:

Foreign currency translation adjustments, net of tax of $ 0 for all periods presented

Comprehensive income (loss)

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income (loss) attributable to SemiLEDs stockholders

Comprehensive loss

Comprehensive loss attributable to noncontrolling interests

Comprehensive loss attributable to SemiLEDs stockholders

See notes to unaudited condensed consolidated financial statements.

6 unchanged sentences

BALANCE—September 1, 2019

Issuance of common stock under equity incentive plans

Stock-based compensation

Change ownership in SBDI*

Comprehensive income (loss):

Other comprehensive income

Other comprehensive income (loss)

BALANCE—November 30, 2019

1 unchanged sentence

Stock-based compensation

Comprehensive loss:

Issuance of common stock for private placement

Issuance of convertible notes

Comprehensive income (loss):

Other comprehensive income (loss)

BALANCE—February 29, 2020

Stock-based compensation

Issuance of common stock for private placement

Conversion of notes into common stocks

Change ownership in SBDI*

Comprehensive income (loss):

Other comprehensive loss

Net income (loss)

BALANCE—May 31, 2020

Comprehensive

1 unchanged sentence

BALANCE—September 1, 2020

Issuance of common stock under equity incentive plans

Stock-based compensation

Change ownership in SBDI*

Comprehensive income (loss):

Other comprehensive income

Other comprehensive income (loss)

BALANCE—November 30, 2020

1 unchanged sentence

Stock-based compensation

Issuance of common stock for private placement

Issuance of convertible notes

Comprehensive loss:

Comprehensive income (loss):

Other comprehensive income (loss)

Net income (loss)

BALANCE—February 28, 2021

Issuance of common stock under equity incentive plans

Stock-based compensation

Comprehensive loss:

Other comprehensive loss

Net (loss) income

BALANCE—May 31, 2021

See notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands of U.S.

Six Months Ended

February 28, 2021

February 29, 2020

Nine Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

3 unchanged sentences

Gain on disposals of long-lived assets, net

Gain on disposals of investment

Accounts receivable

Gain on disposals of investments

Accounts receivable, net

Prepaid expenses and other

12 unchanged sentences

Acquisition of noncontrolling interests

Net cash provided by (used in) financing activities

Changes in cash balances included in deconsolidated subsidiaries

Net cash (used in) provided by financing activities

Changes in cash balance included in deconsolidated subsidiaries

Effect of exchange rate changes on cash and cash equivalents and restricted cash

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

CASH AND CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period

10 unchanged sentences

A portion of the Company’s business consists of the sale of contract manufactured LED products.

The Company’s customers are concentrated in a few select markets, including Taiwan, the United States and China.

As of February 28, 2021, SemiLEDs had two wholly owned subsidiaries.

The Company’s customers are concentrated in a few select markets, including Netherlands, Ireland, Taiwan, Japan, the United States, Germany and India.

As of May 31, 2021, SemiLEDs had two wholly owned subsidiaries.

SemiLEDs Optoelectronics Co., Ltd., or Taiwan SemiLEDs, is the Company’s wholly owned operating subsidiary, where a substantial portion of the assets is held and located, and where a portion of our research, development, manufacturing and sales activities take place.

3 unchanged sentences

The Purchaser paid $ 140,000 to the Company, and the transaction was completed in January 2020.

The Purchaser also subscribed approximately 4% of the Company’s outstanding common shares on January 17, 2020 (see Note 6).

The Purchaser also subscribed for approximately 4 % of the Company’s outstanding common shares on January 17, 2020 (see Note 6).

SemiLEDs’ common stock trades on the NASDAQ Capital Market under the symbol “LEDS”.

7 unchanged sentences

The unaudited condensed consolidated balance sheet as of August 31, 2020 included herein was derived from the audited consolidated financial statements as of that date.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated balance sheet as of February 28, 2021, the statements of operations and comprehensive loss for the three and six months ended February 28, 2021 and February 29, 2020, the statement of changes in equity for the three and six months ended February 28, 2021 and February 29, 2020, and the statements of cash flows for the six months ended February 28, 2021 and February 29, 2020.

The results for the three or six months ended February 28, 2021 are not necessarily indicative of the results to be expected for the year ending August 31, 2021.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated balance sheet as of May 31, 2021, the statements of operations and comprehensive loss for the three and nine months ended May 31, 2021 and 2020, the statement of changes in equity for the three and nine months ended May 31, 2021 and 2020, and the statements of cash flows for the nine months ended May 31, 2021 and 2020.

The results for the three or nine months ended May 31, 2021 are not necessarily indicative of the results to be expected for the year ending August 31, 2021.

Going Concern — The accompanying unaudited interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

1 unchanged sentence

The Company suffered losses from operations of $ 2.1 million and $ 3.7 million, and net cash used in operating activities of $ 1.0 million and $ 3.5 million for the years ended August 31, 2020 and 2019, respectively.

These facts and conditions raise substantial doubt about the Company’s ability to continue as a going concern, even though g ross profit on product sales was $ 1.6 million fo r the year ended August 31, 20 20 compared to $ 452 thousand fo r the year ended August 31, 201 9 .

Loss from operations for the three and six months ended February 2 8 , 20 2 1 were $ 507 thousand and $ 1.5 million , respectively.

N et cash used in operating activities for the six months ended February 2 8 , 20 2 1 was $ 625 thousand.

Moreover , a t February 2 8 , 20 2 1 , the Company’ s cash and cash equivalents had de creased to $ 2.1 million .

However, m anagement believes that it has developed a liquidity plan, as summarized below, that, if executed successfully, should provide sufficient liquidity to meet the Company’s obligations as they become due for a reasonable period of time, and allow the development of its core business.

These facts and conditions raise substantial doubt about the Company’s ability to continue as a going concern, even though gross profit on product sales was $ 1.6 million for the year ended August 31, 2020 compared to $ 452 thousand for the year ended August 31, 2019.

Loss from operations for the three and nine months ended May 31, 2021 was $ 592 thousand and $ 2.1 million, respectively.

Net cash used in operating activities for the nine months ended May 31, 2021 was $ 826 thousand.

Moreover, at May 31, 2021, the Company’s cash and cash equivalents had decreased to $ 1.7 million.

Management believes that it has developed a liquidity plan, as summarized below, that, if executed successfully, should provide sufficient liquidity to meet the Company’s obligations as they become due for a reasonable period of time, and allow the development of its core business.

Gaining positive cash-inflow from operating activities through continuous cost reductions and the sales of new higher margin products.

Steady growth of module products and the continued commercial sales of its UV LED product are expected to improve the Company’s future gross margin, operating results and cash flows.

The Company is targeting niche markets and focusing on product enhancement and developing its LED products into many other applications or devices.

The Company is targeting niche markets and focusing on product enhancement and developing its LED product into many other applications or devices.

Continuing to monitor prices, work with current and potential vendors to decrease costs and, consistent with its existing contractual commitments, may possibly decrease its activity level and capital expenditures further.

This plan reflects its strategy of controlling capital costs and maintaining financial flexibility.

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.

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.

While the Company’s management believes that the measures described in the above liquidity plan will be adequate to satisfy its liquidity requirements for the twelve months after the date that the financial statements are issued, there is no assurance that the liquidity plan will be successfully implemented.

2 unchanged sentences

Restricted Cash Equivalents —Restricted cash primarily consists of cash held in reserved bank accounts in Taiwan.

As of February 28, 2021 and August 31, 2020, the Company’s restricted cash equivalents at current portion amounted $88 thousand and $85 thousand, respectively.

As of February 28, 2021 and August 31, 2020, the Company’s restricted cash at noncurrent portion, which was recorded as other assets, amounted to $103 thousand and $95 thousand, respectively.

As of May 31, 2021 and August 31, 2020, the Company’s restricted cash equivalents at current portion amounted $ 90 thousand and $ 85 thousand, respectively.

As of May 31, 2021 and August 31, 2020, the Company’s restricted cash at noncurrent portion, which was recorded as other assets, amounted to $ 105 thousand and $ 95 thousand, respectively.

Revenue Recognition —Effective September 1 2018, the Company adopted ASC 606 using the modified retrospective transition method.

38 unchanged sentences

Certain Significant Risks and Uncertainties —The Company is subject to certain risks and uncertainties that could have a material and adverse effect on the Company’s future financial position or results of operations, which risks and uncertainties include, among others:

it has incurred significant losses over the past few years, any inability of the Company to compete in a rapidly evolving market and to respond quickly and effectively to changing market requirements, any inability of the Company to grow its revenue and/or maintain or increase its margins, it may experience fluctuations in its revenues and operating results, any inability of the Company to protect its intellectual property rights, claims by others that the Company infringes their proprietary technology, and any inability of the Company to raise additional funds in the future.

it has incurred significant losses over the past years, any inability of the Company to compete in a rapidly evolving market and to respond quickly and effectively to changing market requirements, any inability of the Company to grow its revenue and/or maintain or increase its margins, it may experience fluctuations in its revenues and operating results, any inability of the Company to protect its intellectual property rights, claims by others that the Company infringes their proprietary technology, and any inability of the Company to raise additional funds in the future.

Concentration of Supply Risk —Some of the components and technologies used in the Company’s products are purchased and licensed from a limited number of sources and some of the Company’s products are produced by a limited number of contract manufacturers.

5 unchanged sentences

Deposits held with banks may exceed the amount of insurance provided on such deposits.

As of February 28, 2021 and August 31, 2020, cash and cash equivalents of the Company consisted of the following (in thousands):

As of May 31, 2021 and August 31, 2020, cash and cash equivalents of the Company consisted of the following (in thousands):

Cash and Cash Equivalents by Location

10 unchanged sentences

The allowance for doubtful accounts is based on the management’s assessment of the collectability of its customer accounts.

Management regularly reviews the allowance by considering certain factors, such as historical experience, industry data, credit quality, age of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay.

Net revenues generated from sales to the top ten customers represented 85% and 82% of the Company’s total net revenues for the three and six months ended February 28, 2021 respectively, and 88% and 84% of the Company’s net revenues for the three and six months ended February 29, 2020, respectively.

Management regularly reviews the allowance by considering certain factors, such as historical experience, industry data, credit quality, ages of accounts receivable balances and current economic conditions that may affect a customer’s ability to pay.

Net revenues generated from sales to the top ten customers represented 89 % and 78 % of the Company’s total net revenues for the three and nine months ended May 31, 2021, respectively, and 89 % and 83 % of the Company’s net revenues for the three and nine months ended May 31, 2020, respectively.

The Company’s revenues have been concentrated in a few select markets, including the Netherlands, Ireland, Taiwan, Japan, the United States, Germany and India.

Net revenues generated from sales to customers in these markets, in the aggregate, accounted for 87 % and 83% of the Company’s net revenues for the three and six months ended February 28, 2021, respectively, and 91% and 90% of the Company’s net revenues for the three and six months ended February 29, 2020, respectively.

Net revenues generated from sales to customers in these markets, in the aggregate, accounted for 86 % and 83 % of the Company’s net revenues for the three and nine months ended May 31, 2021, respectively, and 89 % and 90 % of the Company’s net revenues for the three and nine months ended May 31, 2020, respectively.

Noncontrolling Interests —Noncontrolling interests are classified in the consolidated statements of operations as part of consolidated net income (loss) and the accumulated amount of noncontrolling interests in the consolidated balance sheets as part of equity.

6 unchanged sentences

as a result, noncontrolling interest in SBDI increased from zero to 3.31 %.

From January 2019 to February 2021, the Company purchased additional 33,000 common shares of SBDI from non-controlling shareholders.

Therefore, noncontrolling interest in SBDI was down to 3.05% as of February 28, 2021.

From January 2019 to September 2020, the Company purchased additional 33,000 common shares of SBDI from non-controlling shareholders.

Therefore, noncontrolling interest in SBDI declined to 3.05 % as of May 31, 2021.

Recent Accounting Pronouncements

3 unchanged sentences

Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements have not yet been issued.

The Company is currently evaluating the impact ASU 2019-12 will have on the disclosures included in its consolidated financial statements.

The Company does not expect the adoption of this standard to have a material impact on its consolidated financial position, results of operations or cash flows.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40), to reduce the complexity associated with applying U.S.

3 unchanged sentences

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020.

The amendments may be adopted through either a modified retrospective method, or a fully retrospective method.

The amendments may be

adopted through either a modified retrospective method, or a fully retrospective method.

The Company is currently evaluating the impact of adopting ASU 2020-06.

Balance Sheet Components

Inventories as of February 28, 2021 and August 31, 2020 consisted of the following (in thousands):

Inventories as of May 31, 2021 and August 31, 2020 consisted of the following (in thousands):

Raw materials

1 unchanged sentence

Finished goods

Inventory write-downs to estimated net realizable values were $200 thousand and $396 thousand for the three and six months ended February 28, 2021, respectively, and $201 thousand and $320 thousand for the three and six months ended February 29, 2020, respectively.

Inventory write-downs to estimated net realizable values were $ 159 thousand and $ 555 thousand for the three and nine months ended May 31, 2021, respectively, and $ 251 thousand and $ 571 thousand for the three and nine months ended May 31, 2020, respectively.

Property, Plant and Equipment

Property, plant and equipment as of February 28, 2021 and August 31, 2020 consisted of the following (in thousands):

Property, plant and equipment as of May 31, 2021 and August 31, 2020 consisted of the following (in thousands):

Buildings and improvements

7 unchanged sentences

Intangible Assets

Intangible assets as of February 28, 2021 and August 31, 2020 consisted of the following (in thousands):

February 28, 2021

Intangible assets as of May 31, 2021 and August 31, 2020 consisted of the following (in thousands):

Period (Years)

6 unchanged sentences

Investments in Unconsolidated Entities

The Company’s ownership interest and carrying amounts of investments in unconsolidated entities as of February 28, 2021 and August 31, 2020 consisted of the following (in thousands, except percentages):

February 28, 2021

The Company’s ownership interest and carrying amounts of investments in unconsolidated entities as of May 31, 2021 and August 31, 2020 consisted of the following (in thousands, except percentages):

August 31, 2020

Equity method investments:

Equity investment without readily determinable fair value

Total investments in unconsolidated entities

There were no dividends received from unconsolidated entities through February 28, 2021.

There were no dividends received from unconsolidated entities through May 31, 2021.

Equity Investments without Readily Determinable Fair Value

2 unchanged sentences

Commitments and Contingencies

Operating Lease Agreements —The Company has several operating leases with unrelated parties, primarily for land, plant and office spaces in Taiwan, which include cancellable and noncancelable and which expire at various dates between December 2021 and December 2040.

Operating Lease Agreements — The Company has several operating leases with unrelated parties, primarily for land, plant and office spaces in Taiwan, which include cancelable and noncancelable and which expire at various dates between December 2021 and December 2040 .

Leases with an initial term of 12 months or less are not recorded on the balance sheet;

5 unchanged sentences

Lease expense is recognized on a straight-line basis over the term of the lease.

Lease expense related to these noncancelable operating leases was $40 thousand and $81 thousand for three months and six months ended February 28, 2021.

Lease expense related to these noncancelable operating leases was $38 thousand and $76 thousand for three months and six months ended February 29, 2020.

Lease expense related to these noncancelable operating leases was $ 42 thousand and $ 123 thousand for three months and nine months ended May 31, 2021, respectively.

Lease expense related to these noncancelable operating leases was $ 39 thousand and $ 115 thousand for three months and nine months ended May 31, 2020, respectively.

Balance sheet information related to the Company’s leases is presented below:

February 28, 2021

Operating lease right of use assets

2 unchanged sentences

The following provides details of the Company’s lease expenses:

Six Months Ended

February 28, 2021

Operating lease expenses, net

Nine Months Ended

Operating lease expenses

Other information related to leases is presented below:

Six Months Ended

February 28, 2021

Nine Months Ended

Cash Paid for amounts Included In Measurement of Liabilities:

5 unchanged sentences

As most of the Company’s leases do not provide an implicit rate, the Company uses its average borrowing rate from non-related parties of 1.76% based on the information available at commencement date in determining the present value of lease payments.

The aggregate future noncancelable minimum rental payments for the Company’s operating leases as of February 28, 2021 consisted of the following (in thousands):

The aggregate future noncancelable minimum rental payments for the Company’s operating leases as of May 31, 2021 consisted of the following (in thousands):

Years Ending August 31,

3 unchanged sentences

Present value of future minimum lease payments

Purchase Obligations —The Company had purchase commitments for inventory, property, plant and equipment in the amount of $108 thousand and $33 thousand as of February 28, 2021 and August 31, 2020, respectively.

Purchase Obligations —The Company had purchase commitments for inventory, property, plant and equipment in the amount of $ 101 thousand and $ 33 thousand as of May 31, 2021 and August 31, 2020, respectively.

Litigation —The Company is directly or indirectly involved from time to time in various claims or legal proceedings arising in the ordinary course of business.

7 unchanged sentences

Pursuant to the terms of the Purchase Agreement, the Company retained the $500 thousand payment as liquidated damages.

Well Thrive alleged that the liquidated damages provision was unenforceable as an illegal penalty and did not reflect the amount of purported damages.

Well Thrive alleges that the liquidated damages provision was unenforceable as an illegal penalty and did not reflect the amount of purported damages.

The Court held a trial on March 2, 2020.

1 unchanged sentence

Both sides submitted post-trial briefs and proposed findings of fact on April 30, 2020.

On December 21, 2020, the judge, following a hearing, issued her judgment, which order ed SemiLEDs to return the $ 500,000 to Well Thrive, and required both parties, on or before January 6, 2021, to submit information on the appropriate amount of interest to be added.

On December 21, 2020, the judge, following a hearing, issued her judgment, which ordered SemiLEDs to return the $ 500,000 to Well Thrive, and required both parties, on or before January 6, 2021, to submit information on the appropriate amount of interest to be added.

On January 6, 2021, the Company filed a brief arguing that there should not be an award of prejudgment interest, and Well Thrive is arguing for the amount of $ 135,774 in pre-judgment interest.

As of the date of filing this report, the judge has not yet decided on the interest issue.

O n January 20, 2021, the Company filed a notice of appeal from the judgment in the U.S.

Third Circuit Court of Appeals .

T he Court of Appeals has not yet set a briefing schedule and has not yet scheduled any argument.

T he Company recorded the $ 500,000 in advance receipt toward the convertible note under current liabilities as of February 28, 2021.

Except as described above, as of February 28 2021, there was no pending or threatened litigation that could have a material impact on the Company’s financial position, results of operations or cash flows.

On April 8, 2021, the judge issued a ruling requiring the Company to pay pre-judgment interest in the amount of $ 123,000 to Well Thrive.

On May 7, 2021, the Court of Appeal issued an order requiring the parties to mediate on June 28, 2021.

The Company and Well Thrive Ltd entered into an Agreement Regarding Satisfaction of Judgment dated June 14, 2021, as amended on June 16, 2021 and June 21, 2021 (collectively, the “Settlement Agreement”), pursuant to which the Company issued 35,365 shares (the “Shares”) of its common stock to Well Thrive Ltd.

The Shares were issued to satisfy the amount payable under the Settlement Agree ment and, accordingly, no cash proceeds were received by the Company from the issuance of the Shares.

Except as described above, as of May 31 20 2 1 , there was no pending or threatened litigation that could have a material impact on the Company’s financial position, resul ts of operations or cash flows.

On January 17, 2020, the Company entered into a definitive common stock purchase agreement with XianChang Ma.

12 unchanged sentences

On July 31, 2019, the stockholders approved an increase in the authorized share reserve under the 2010 plan by an additional 500 thousand shares, to extend expiration of the 2010 Plan to November 3, 2023 , to remove the IRS Code section 162(m) provisions, and to modify the maximum grant limit to 35 thousand shares to one person in a one year period.

On September 25, 2020, stockholders approved the amended 2010 Equity Incentive Plan to increase the authorized shares reserve by an additional 400 thousand shares.

On September 25, 2020, the stockholders approved an amendment to the 2010 Equity Incentive Plan to increase the authorized shares reserve by an additional 400 thousand shares.

Prior to SemiLEDs’ initial public offering, the Company had another stock-based compensation plan (the “2005 Plan”), but awards are made from the 2010 Plan after the initial public offering.

Options outstanding under the 2005 Plan continue to be governed by its existing terms.

A total of 1,421 thousand and 1,021 thousand shares was reserved for issuance under the 2010 Plan, respectively, as of February 28, 2021 and February 29, 2020.

As of February 28, 2021 and February 29, 2020, there were 1,048 thousand and 548 thousand shares of common stock available for future issuance under the equity incentive plans, respectively.

In November 2020, SemiLEDs granted 15 thousand restricted stock units to its directors, which vested 25% on February 12, 2021 and will vest 25% every three months on May 12, 2021, August 12, 2021 and November 12, 2021.

In the event that the 2021 annual meeting falls before November 12, 2021, 100% of the stock units shall immediately vest on the date of the 2021 annual meeting.

A total of 1,421 thousand and 1,021 thousand shares was reserved for issuance under the 2010 Plan, respectively, as of May 31, 2021 and 2020.

As of May 31, 2021 and 2020, there were 1,037 thousand and 548 thousand shares of common stock available for future issuance under the equity incentive plans, respectively.

In November 2020, SemiLEDs granted 15 thousand restricted stock units to its directors, which vested 25% on February 12, 2021, and May 12, 2021 and will vest 25 % on August 12, 2021 and November 12, 2021.

If the 2021 annual meeting is held before November 12, 2021, 100% of the stock units shall immediately vest on the date of the 2021 annual meeting.

The grant-date fair value of the restricted stock units was $ 3.00 per unit.

In November 2020, SemiLEDs granted 33 thousand restricted stock units to its employees, which vested 25 % on February 12, 2021 and will vest 25% every three months on May 12, 2021, August 12, 2021 and November 12, 2021 and will become fully vested upon a change in control.

In November 2020, SemiLEDs granted 33 thousand restricted stock units to its employees, which vested 25% on February 12, 2021, and May 12, 2021 and will vest 25 % on August 12, 2021 and November 12, 2021 and will become fully vested upon a change in control.

The grant-date fair value of the restricted stock units was $ 3.00 per unit.

13 unchanged sentences

A forfeiture rate of zero is estimated for stock-based awards with vesting term that is less than or equal to one year from the date of grant.

A summary of the stock-based compensation expense for the three and six months ended February 28, 2021 and February 29, 2020 was as follows (in thousands):

A summary of the stock-based compensation expense for the three and nine months ended May 31, 2021 and 2020 was as follows (in thousands):

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Nine Months Ended

Cost of revenues

4 unchanged sentences

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Stock units and stock options to purchase common

The Company’s income (loss) before income taxes for the three and six months ended February 28, 2021 and February 29, 2020 consisted of the following (in thousands):

Nine Months Ended

Stock units and stock options to purchase common stock

The Company’s income (loss) before income taxes for the three and nine months ended May 31, 2021 and 2020 consisted of the following (in thousands):

Three Months Ended

Six Months Ended

February 28, 2021

February 29, 2020

February 28, 2021

February 29, 2020

Nine Months Ended

Foreign operations

Income (loss) before income taxes

Loss before income taxes

Unrecognized Tax Benefits

8 unchanged sentences

Provisional estimate of the Company is that no tax will be due under this provision.

As of both February 28, 2021 and August 31, 2020, the Company had no unrecognized tax benefits related to tax positions taken in prior periods.

As of both May 31 2021 and August 31, 2020, the Company had no unrecognized tax benefits related to tax positions taken in prior periods.

The Company files income tax returns in the United States, various U.S.

6 unchanged sentences

Simplot Company, its largest shareholder, and Trung Doan, its Chairman and Chief Executive Officer (together, the “Holders”), with a principal sum of $ 1.5 million and $ 500 thousand, respectively, and an annual interest rate of 3.5 %.

Principal and accrued interest shall be due on demand by the Holders on and at any time after May 30, 2021.

Principal and accrued interest is due on demand by the Holders on and at any time after May 30, 2021 .

The outstanding principal and unpaid accrued interest of the Notes may be converted into the Company’s common stock based on a conversion price of $ 3.00 per share, at the option of the Holders any time from the date of the Notes.

On May 25, 2020, each of the Holders converted $ 300,000 of the Notes into 100,000 shares of the Company’s common stock.

On January 8, 2019, the Company 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 both 8%.

On May 26, 2021, the Notes were extended with the same terms and interest rate for one year, which is mature on May 30, 2022 .

As of May 31, 2021 and August 31, 2020, the outstanding principal of these notes totaled $ 1.4 million.

On January 8, 2019, the Company entered into loan agreements with each of the Chairman and Chief Executive Officer and the largest shareholder of the Company, with aggregate amounts of $ 1.7 million and $ 1.5 million, respectively, and an annual interest rate of 8 %.

All proceeds of the loans were exclusively used to return the deposit to Formosa Epitaxy Incorporation in connection with the cancelled proposed sale of the Company’s headquarters building pursuant to the agreement dated December 15, 2015.

The Company is required to repay the loans of $1.5 million on January 14, 2021 and $1.7 million on January 22, 2021, respectively.

The Company was required to repay $ 1.5 million of the loans on January 14, 2021 and $ 1.7 million on January 22, 2021 , respectively.

In February 2021, the loan agreements were extended with the same principal amount and interest rate for one year, which is due on January 15, 2022.

As of February 28, 2021 and August 31, 2020, these loans totaled $3.2 million.

As of May 31, 2021 and August 31, 2020, these loans totaled $ 3.2 million.

The loans are secured by a second priority security interest on the headquarters building of the Company.

Subsequent Events

The Company has analyzed its operations subsequent to February 28, 2021 to the date these unaudited condensed consolidated financial statements were issued, finding that the impact of COVID-19 on the Company is unknown at this time and the financial consequences of this situation cause uncertainty as to the future and its effects on the economy and the Company.

The Company has analyzed its operations subsequent to May 31, 2021 to the date these unaudited condensed consolidated financial statements were issued, finding that the impact of COVID-19 on the Company is unknown at this time and the financial consequences of this situation cause uncertainty as to the future and its effects on the economy and the Company.

On June 22, 2021, the Company issued 35,365 shares of the Company’s common stock pursuant to an Agreement Regarding Satisfaction of Judgment dated June 14, 2021, as amended on June 16, 2021 and June 21, 2021 (collectively, the “Settlement Agreement”), by and between the Company and Well Thrive Ltd.

(“Well Thrive”).

The shares were issued in consideration of the amount payable under the terms of the Settlement Agreement accordingly, no cash proceeds were received by the Company from the issuance of the shares (see Note 5).

On July 6, 2021, the Company entered into a Sales Agreement (the “Sales Agreement”) with Roth Capital Partners, LLC (the “Agent”).

In accordance with the terms of the Sales Agreement, the Company may offer and sell from time to time through the Agent the Company’s common stock having an aggregate offering price of up to $ 20,000,000 (the “Placement Shares”).

The Placement Shares will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3 (Registration No.

Sales of the Placement Shares, if any, will be made on Nasdaq at market prices by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 of the Securities Act of 1933, as amended.

The Company will pay a commission to the Agent of 3.0 % of the gross proceeds of the sale of the Placement Shares sold under the Agreement and reimburse the Agent for certain expenses.

Except for the above, the Company has determined that it does not have any material subsequent events to disclose in these unaudited condensed consolidated financial statements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements