What changed in this filing

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Item 1. Financial Statements

2022-04-07 compared with 2022-01-12 · 140 added, 96 removed, 330 unchanged (42% of the section changed)

7 unchanged sentences

Restricted cash and cash equivalents

Accounts receivable (including related parties), net of allowance for doubtful accounts of $ 199 and $ 199 as of November 30, 2021 and August 31, 2021, respectively

Accounts receivable (including related parties), net of allowance for doubtful accounts of $ 197 and $ 199 as of February 28, 2022 and August 31, 2021, respectively

Prepaid expenses and other current assets

10 unchanged sentences

Other payable to related parties

Operating lease liabilities, current portion

Operating lease liabilities, current

Total current liabilities

5 unchanged sentences

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

4,460 shares issued and outstanding as of both November 30, 2021 and August 31, 2021

4,514 shares and 4,460 shares issued and outstanding as of February 28, 2022 and August 31, 2021, respectively

Additional paid-in capital

9 unchanged sentences

dollars and shares, except per share data)

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2022

February 28, 2021

February 28, 2022

February 28, 2021

Revenues, net

Cost of revenues

Gross profit (loss)

Operating expenses:

1 unchanged sentence

Selling, general and administrative

Gain on disposals of long-lived assets

Gain on disposals of long-lived assets, net

Total operating expenses

3 unchanged sentences

Other income, net

Foreign currency transaction (loss) gain, net

Total other income, net

Foreign currency transaction gain (loss), net

Total other income (expenses), net

Loss before income taxes

Income tax expense

Net loss attributable to noncontrolling interests

Net income (loss) 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 Loss

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands of U.S.

Three Months Ended November 30,

Other comprehensive gain (loss), net of tax:

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

Three Months Ended

Six Months Ended

February 28, 2022

February 28, 2021

February 28, 2022

February 28, 2021

Other comprehensive loss, net of tax:

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

Comprehensive loss

Comprehensive loss attributable to noncontrolling interests

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive loss attributable to SemiLEDs stockholders

1 unchanged sentence

SEMILEDS CORPORATION AND SUBSIDIARIES

Unaudited Condensed Consolidated Statements of Changes in Equity

Unaudited Condensed Consolidated Statement of Changes in Equity

(In thousands of U.S.

2 unchanged sentences

Shareholders'

BALANCE at September 1, 2021

BALANCE—September 1, 2021

Stock-based compensation

Comprehensive income (loss):

Other comprehensive income

BALANCE—November 30, 2021

Issuance of common stock under equity incentive plans

Stock-based compensation

Comprehensive loss:

Other comprehensive income (loss)

BALANCE at November 30, 2021

BALANCE—February 28, 2022

Comprehensive

Shareholders'

BALANCE at September 1, 2020

BALANCE—September 1, 2020

Stock-based compensation

Change ownership in SBDI*

Comprehensive income (loss):

Other comprehensive income

BALANCE—November 30, 2020

Issuance of common stock under equity incentive plans

Stock-based compensation

Comprehensive loss:

Other comprehensive income (loss)

BALANCE at November 30, 2020

BALANCE—February 28, 2021

See notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

(In thousands of U.S.

Three Months Ended November 30,

Six Months Ended

February 28, 2022

February 28, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Provisions for inventory write-downs

Gain on disposals of long-lived assets

Gain on disposals of long-lived assets, net

Loss on disposals of patent

Accounts receivable

Prepaid expenses and other assets

Prepaid expenses and other

Accounts payable

Accrued expenses and other current liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

2 unchanged sentences

Payments for development of intangible assets

Net cash (used in) provided by investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

2 unchanged sentences

Net cash used in financing activities

Effect of exchange rate changes on cash and cash equivalents

NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH

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

NET INCREASE (DECREASE) 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, Germany and India.

As of November 30, 2021, SemiLEDs had two wholly owned subsidiaries.

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

As of February 28, 2022, 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.

9 unchanged sentences

The unaudited condensed consolidated balance sheet as of August 31, 2021 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 unaudited condensed consolidated balance sheet as of November 30, 2021, the unaudited condensed statements of operations and comprehensive loss for the three months ended November 30, 2021 and 2020, the statements of changes in equity for the three months ended November 30, 2021 and 2020, and the statements of cash flows for the three months ended November 30, 2021 and 2020.

The results for the three months ended November 30, 2021 are not necessarily indicative of the results to be expected for the year ending August 31, 2022.

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, 2022, the statements of operations and comprehensive loss for the three and six months ended February 28, 2022 and February 28, 2021, the statement of changes in equity for the three and six months ended February 28, 2022 and February 28, 2021, and the statements of cash flows for the six months ended February 28, 2022 and February 28, 2021.

The results for the three or six months ended February 28, 2022 are not necessarily indicative of the results to be expected for the year ending August 31, 2022.

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.

The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.

The Company suffered losses from operations of $ 3.9 million and $ 2.1 million, and used net cash in operating activities of $ 1.7 million and $ 1.0 million for the years ended August 31, 2021 and 2020, respectively.

The Company suffered losses from operations of $ 3.9 million and $ 2.1 million, and net cash used in operating activities of $ 1.7 million and $ 1.0 million for the years ended August 31, 2021 and 2020, respectively.

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 $ 1.0 million for the year ended August 31, 2021 compared to $ 1.6 million for the year ended August 31, 2020.

On November 30, 2021, the Company’s cash and cash equivalents had increased to $ 4.1 million compared to $ 2.7 million November 30, 2020 mainly due to the issuance of common stock.

Further, loss from operations for the three months ended November 30, 2021 and 2020 was $ 978 thousand and $ 972 thousand, respectively.

Loss from operations for the three and six months ended February 28, 2022 were $ 379 thousand and $ 1.4 million, respectively.

Net cash used in operating activities for the six months ended February 28, 2022 was $ 1.0 million.

Moreover, at February 28, 2022, the Company’s cash and cash equivalents had decreased to $ 3.7 million.

However, 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.

Gaining positive cash-inflow from operating activities through continuous cost reductions and 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 focused 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.

The Company is targeting niche markets and focusing on product enhancement and developing its LED products 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, possibly decreasing its activity level and capital expenditures further.

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

Raising additional cash through further 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.

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 November 30, 2021 and August 31, 2021, the Company’s restricted cash equivalents at current portion were amounted both $ 90 thousand.

As of November 30, 2021 and August 31, 2021, the Company’s restricted cash at noncurrent portion, which was recorded as other assets were amounted both $ 105 thousand.

As of February 28, 2022 and August 31, 2021, the Company’s restricted cash equivalents at current portion amounted $ 89 thousand and $ 90 thousand, respectively.

As of February 28, 2022 and August 31, 2021, the Company’s restricted cash at noncurrent portion, which was recorded as other assets, amounted to $ 104 thousand and $ 105 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 several 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 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.

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 November 30, 20 2 1 and August 31, 20 2 1 , cash and cash equivalents of the Company consisted of the following (in thousands):

As of February 28, 2022 and August 31, 2021, cash and cash equivalents of the Company consisted of the following (in thousands):

Cash and Cash Equivalents by Location

2 unchanged sentences

Denominated in U.S.

Denominated in New Taiwan dollars (NT$)

Denominated in New Taiwan dollars

Denominated in other currencies

5 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, 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 90 % and 85 % of the Company’s total net revenues for both the three months ended November 30, 2021 and 2020, respectively.

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

Net revenues generated from sales to customers in these markets, in the aggregate, accounted for 76 % and 57 % of the Company’s net revenues for the three months ended November 30, 2021 and 2020, 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.

Net revenues generated from sales to the top ten customers represented 91 % and 88 % of the Company’s total net revenues for the three and six months ended February 28, 2022 respectively, and 85 % and 82 % of the Company’s net revenues for the three and six months ended February 28, 2021, respectively.

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

Net revenues generated from sales to customers in these markets, in the aggregate, accounted for 85 % and 86 % of the Company’s net revenues for the three and six months ended February 28, 2022, respectively, and 83 % and 78 % of the Company’s net revenues for the three and six months ended February 28, 2021, 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.

1 unchanged sentence

If a change in ownership of a consolidated subsidiary results in loss of control and deconsolidation, any retained ownership interests are remeasured with the gain or loss reported in net earnings.

On September 1, 2018, Taiwan Bandaoti Zhaoming Co., Ltd., the Company’s wholly owned operating subsidiary, issued 414,000 common shares and amended its certificate of incorporation to increase its issued common stock from 12,087,715 to 12,501,715 .

As of the issuance date, the increased capital of $ 176 thousand (NT$ 5.4 million) has been completely received in cash by Taiwan Bandaoti Zhaoming Co., Ltd.

The Company did not subscribe for the newly issued common shares, and, as a result, noncontrolling interest in the Company was increased from zero to 3.31 %.

From January 2019 to September 2020, the Company purchased an additional 33,000 shares of Taiwan Bandaoti Zhaoming Co., Ltd., from non-controlling shareholders.

Therefore, noncontrolling interest in SBDI was down to 3.05 % as of November 30, 2021.

On September 1, 2018, Taiwan Bandaoti Zhaoming Co., Ltd.

(“SBDI”), the Company’s then wholly owned operating subsidiary, issued 414,000 common shares and amended its certificate of incorporation to increase its common stock issued from 12,087,715 to 12,501,715 shares.

As of the issuance date, the increased capital of $ 176 thousand (NT$ 5.4 million) has been received in full amount by Taiwan Bandaoti Zhaoming Co., Ltd.

The Company did not subscribe for any newly issued common shares at the issuance date;

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

From January 2019 to September 2020, the Company purchased additional 33,000 common shares of Taiwan Bandaoti Zhaoming Co., Ltd., from non-controlling shareholders.

Therefore, noncontrolling interest in SBDI was down to 3.05 % as of February 28, 2022.

Recent Accounting Pronouncements

25 unchanged sentences

Balance Sheet Components

Inventories as of November 30, 2021 and August 31, 2021 consisted of the following (in thousands):

Inventories as of February 28, 2022 and August 31, 2021 consisted of the following (in thousands):

Raw materials

1 unchanged sentence

Finished goods

Inventory write-downs to estimated net realizable values were $ 231 and $ 196 thousand for the three months ended November 30, 2021 and 2020, respectively.

Inventory write-downs to estimated net realizable values were $ 185 thousand and $ 416 thousand for the three and six months ended February 28, 2022, respectively, and $ 200 thousand and $ 396 thousand for the three and six months ended February 28, 2021, respectively.

Property, Plant and Equipment

Property, plant and equipment as of November 30, 2021 and August 31, 2021 consisted of the following (in thousands):

Property, plant and equipment as of February 28, 2022 and August 31, 2021 consisted of the following (in thousands):

Buildings and improvements

2 unchanged sentences

Other equipment

Construction in progress

Total property, plant and equipment

2 unchanged sentences

Intangible Assets

Intangible assets as of November 30, 2021 and August 31, 2021 consisted of the following (in thousands):

November 30, 2021

Intangible assets as of February 28, 2022 and August 31, 2021 consisted of the following (in thousands):

February 28, 2022

Period (Years)

6 unchanged sentences

Investments in Unconsolidated Entities

The Company’s ownership interest and carrying amounts of investments in unconsolidated entities as of November 30, 2021 and August 31, 2021 consisted of the following (in thousands, except percentages):

November 30, 2021

The Company’s ownership interest and carrying amounts of investments in unconsolidated entities as of February 28, 2022 and August 31, 2021 consisted of the following (in thousands, except percentages):

February 28, 2022

August 31, 2021

Equity method investments:

Equity investment without readily determinable fair value

Total investments in unconsolidated entities

There were no dividends received from unconsolidated entities through November 30, 2021.

There were no dividends received from unconsolidated entities through February 28, 2022.

Equity Investments without Readily Determinable Fair Value

Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the Company) which do not have readily determinable fair values are recorded as equity investment without readily determinable fair value.

All equity investments without readily determinable fair value are assessed for impairment when events or changes in circumstances indicate that the carrying amounts may not be recoverable, and measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuers.

minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer s .

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 noncancellable leases 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 cancellable and noncancelable leases and which expire at various dates between December 2024 and December 2040 .

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

2 unchanged sentences

Most leases do not include options to renew.

The exercise of lease renewal options has to be agreed by the leasers.

The exercise of lease renewal options has to be agreed by the lessors.

The depreciable life of assets and leasehold improvements are limited by the term of leases, unless there is a transfer of title or purchase option reasonably certain of exercise.

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

Lease expense related to these noncancellable operating leases were $ 42 and $ 40 thousand for three months ended November 30, 2021 and 2020, respectively.

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

Lease expense related to these noncancelable operating leases was $ 42 thousand and $ 84 thousand for three months and six months ended February 28, 2022, respectively.

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

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

November 30, 2021

February 28, 2022

August 31, 2021

3 unchanged sentences

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

Three Months Ended November 30,

Operating lease expenses

Three Months Ended February 28,

Operating lease expenses, net

Six Months Ended February 28,

Operating lease expenses, net

Other information related to leases is presented below:

Three Months Ended November 30,

Six Months Ended February 28,

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 noncancellable minimum rental payments for the Company’s operating leases as of November 30, 2021 consisted of the following (in thousands):

The aggregate future noncancelable minimum rental payments for the Company’s operating leases as of February 28, 2022 consisted of the following (in thousands):

Years Ending August 31,

Operating Leases

Remainder of 2022

2 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 $ 133 thousand and $ 101 thousand as of November 30, 2021 and August 31, 2021, respectively.

Purchase Obligations —The Company had purchase commitments for inventory, property, plant and equipment in the amount of $ 286 thousand and $ 101 thousand as of February 28, 2022 and August 31, 2021, 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.

1 unchanged sentence

There is significant judgment required in assessing both the likelihood of an unfavorable outcome and whether the amount of loss, if any, can be reasonably estimated.

As of November 30, 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.

As of February 28 2022, 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.

In June 2021, the Company and Well Thrive Ltd., entered into an Agreement Regarding Satisfaction of Judgment dated June 14, 2021 (the “Settlement Agreement”) pursuant to which the Company issued 35,365 shares (the “Shares”) of common stock to Well Thrive Ltd., valued at $ 650,000 .

5 unchanged sentences

In July 2021, 344,391 shares of the Company’s common stock were issued for gross proceeds of $ 4,175,225 , before placement agent fees and legal fees of $ 126,576 .

No sales were made during the quarter ended November 30, 2021.

No sales were made during the six months ended February 28, 2022.

Stock-based Compensation

5 unchanged sentences

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

A total of 1,421 and 1,421 thousand shares was reserved for issuance under and 2010 Plan as of November 30, 2021 and 2020, respectively.

As of November 30, 2021 and 2020, there were 1,015 thousand and 1,092 thousand shares of common stock available for future issuance under the equity incentive plans.

In November 2021, SemiLEDs granted 15 thousand restricted stock units to its directors that will vest 25 % every three months on February 12, 2022, May 12, 2022, August 12, 2022 and November 12, 2022.

A total of 1,421 thousand and 1,421 thousand shares was reserved for issuance under the 2010 Plan as of February 28, 2022 and 2021, respectively.

As of February 28, 2022 and 2021 there were 809 thousand and 1,048 thousand shares of common stock available for future issuance under the equity incentive plans, respectively.

In November 2021, SemiLEDs granted 15 thousand restricted stock units to its directors that vest 25 % every three months on February 12, 2022, May 12, 2022, August 12, 2022 and November 12, 2022.

In the event that the 2022 annual meeting falls before November 12, 2022, 100% of the stock units shall immediately vest on the date of the 2022 annual meeting.

The grant-date fair value of the restricted stock units was $ 7.10 per unit.

In November 2021, SemiLEDs granted 98.5 thousand restricted stock units to its employees, which will vest 12.5 % every three months on the vesting commencement date of November 2021 and will become fully vested upon a change in control.

In November 2021, SemiLEDs granted 98.5 thousand restricted stock units to its employees, which vest 12.5 % every three months on the vesting commencement date of November 2021 and will become fully vested upon a change in control.

The grant-date fair value of the restricted stock units was $ 7.10 per unit.

4 unchanged sentences

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

In January 2020, SemiLEDs granted 136 thousand restricted stock units to its employees, which vest 25 % each year on January 10 of 2021, 2022, 2023 and 2024 and will become fully vested upon a change in control.

In January 2020, SemiLEDs granted 136 thousand restricted stock units to its employees, which vest 25 % each year on January 10, 2021, 2022, 2023 and 2024 and will become fully vested upon a change in control.

The grant-date fair value of the restricted stock units was $ 2.39 per unit.

7 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 months ended November 30, 2021 and 2020 was as follows (in thousands):

Three Months Ended November 30,

A summary of the stock-based compensation expense for the three and six months ended February 28, 2022 and February 28, 2021 was as follows (in thousands):

Three Months Ended

Six Months Ended

February 28, 2022

February 28, 2021

February 28, 2022

February 28, 2021

Cost of revenues

3 unchanged sentences

The following stock-based compensation plan awards were excluded from the computation of diluted net loss per share of common stock for the periods presented because including them would have been anti-dilutive (in thousands of shares):

Three Months Ended November 30,

Stock units and stock options to purchase common stock

The Company’s loss before income taxes for the three months ended November 30, 2021 and 2020 consisted of the following (in thousands):

Three Months Ended November 30,

Three Months Ended

Six Months Ended

February 28, 2022

February 28, 2021

February 28, 2022

February 28, 2021

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, 2022 and February 28, 2021 consisted of the following (in thousands):

Three Months Ended

Six Months Ended

February 28, 2022

February 28, 2021

February 28, 2022

February 28, 2021

Foreign operations

Loss before income taxes

Income (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 November 30, 2021 and August 31, 2021, the Company had no unrecognized tax benefits related to tax positions taken in prior periods.

As of both February 28, 2022 and August 31, 2021, 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.

1 unchanged sentence

The tax years 2016 through 2019 remain open in most jurisdictions.

With few exceptions, as of November 30, 2021, the Company is no longer subject to U.S.

With few exceptions, the Company is no longer subject to U.S.

federal, state, local, or foreign examinations by tax authorities for tax years before 2015.

1 unchanged sentence

Related Party Transactions

On December 6, 2019 and on December 10, 2019, the Company issued convertible unsecured promissory notes (the “Notes”) to J.R.

On December 6, 2019 and on December 10, 2019, the Company issued convertible unsecured promissory notes (the “Notes”) to each of J.R.

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 was initially due on demand by the Holders on and at any time after May 30, 2021 .

Principal and accrued interest shall be 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 May 26, 2021, the Notes were extended with the same terms and interest rate for one year and now mature on May 30, 2022 .

As of November 30, 2021 and August 31, 2021, the outstanding principal of these notes totaled $ 1.4 million.

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

As of February 28, 2022 and August 31, 2021, 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 both 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, unless the loans are sooner accelerated pursuant to the loan agreements.

The Company was required to repay the loans of $ 1.5 million on January 14, 2021 and $ 1.7 million on January 22, 2021 , respectively, unless the loans are sooner accelerated pursuant to the loan agreements.

On January 16, 2021, the maturity date of these loans was extended with same terms and interest rate for one year to January 15, 2022 .

As of November 30, 2021 and August 31, 2021, these loans totaled $ 3.2 million.

And on January 14, 2022, the maturity date of these loans was extended with same terms and interest rate for one more year to January 15, 2023 .

As of February 28, 2022 and August 31, 2021, 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 November 30, 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 February 28, 2022 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.

Except for the above, the Company has determined that it does not have any other 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