SemiLEDs Corp

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A, Risk Factors, of our 2024 Annual Report, other than as described below:

We may fail to qualify for continued listing on Nasdaq which could make it more difficult for investors to sell their shares.

Our common stock is listed on the Nasdaq Capital Market. To maintain that listing, we must satisfy the continued listing requirements of Nasdaq for continued listing on the Nasdaq Capital Market, including among other things, a minimum stockholders equity of $2.5 million and a minimum bid price for our common stock of $1.00 per share.

On December 4, 2024, we received a notice from Nasdaq indicating that we did not meet the minimum of $2.5 million in stockholders equity required by Nasdaq Listing Rule 5550(b)(1) for continued listing or the alternatives of market value of listed securities or net income from continuing operations. Pursuant to the Nasdaq listing rule, we submitted a plan to Nasdaq. Nasdaq accepted our plan, and we were granted an extension of up to 180 calendar days from December 4, 2024 to evidence compliance.

On February 28, 2025, we delivered payment notices indicating our intent to repay $1,200,000 and $400,000 of loan principal by delivering 722,891 shares and 240,963 shares of our common stock to Simplot Taiwan Inc. and Trung Doan, respectively, based on the closing price of $1.66 per share on February 27, 2025. The shares of common stock were issued in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended. As a result of the repayment in shares, our stockholders equity exceeded $2.5 million as of February 28, 2025. Based on these transactions, Nasdaq issued a conditional compliance letter on April 17, 2025.

There can be no assurance that we will be able to regain and maintain compliance with Nasdaqs continued listing requirements or that our common stock will not be delisted from Nasdaq.

If our common stock is delisted by Nasdaq, we expect prices for our common stock to be quoted on one of the OTC Markets or the OTC Bulletin Board. Under such circumstances, stockholders may find it more difficult to sell, or to obtain accurate quotations, for our common stock, and our common stock would become substantially less attractive to certain purchasers such as financial institutions, hedge funds and other similar investors. There is no assurance, however, that prices of our common stock would be quoted on one of these other trading systems or that an active trading market for our common stock would thereafter exist, which would materially and adversely impact the market value of our common stock.

We may delay the recognition of revenues if the shipment is delayed.

In the seconthird quarter of fiscal 2025, we received buy-sell purchase orders, pursuant to which we purchased equipment and then resold the goods to our customer. The revenue relating to these purchase orders was $9.416.5 million in the seconthird quarter of fiscal 2025, and the associated cost of revenue was $8.915.7 million.

We anticipate more buy-sell purchase orders in the thirdfourth quarter of fiscal 2025. As a result of these purchase orders and associated uncertainty of the business, our revenue, cost of revenues, receivables, inventories and customer deposits over the next quarter may be vary significantly. We cannot assure you when, or if, the revenue will be recognized, when payments will be received, or if we will receive further orders in the future.

Trade matters, including tariffs, may impact our ability to compete cost-effectively.

345

Our operations are subject to complex trade and customs laws, regulations, and tax requirements. The countries in which our products are sold from time to time impose duties, tariffs, or other restrictions on our sales or adversely change existing restrictions. For example, the United States has recently imposed or proposed imposing substantial tariffs on goods imported from many countries, including a 32% tariff on goods imported from Taiwan. In fiscal 2024, 28 percent of our products, by dollar value, was sold into the United States. The current political landscape, including with respect to the United States foreign policy priorities and relations with trading partners, has introduced greater uncertainty with respect to future tax and trade policy. We are unable to determine the impact that changes in tax and trade policy could have on our sales into the United States or other countries, but it could be material.