SemiLEDs Faces Nasdaq Delisting, Sells 1M Shares at $0.50

TL;DR

**SemiLEDs is getting delisted from Nasdaq and just sold a million shares for cheap, expect volatility.**

AI Summary

SemiLEDs Corp (LEDS) announced on January 8, 2024, that it received a delisting notice from Nasdaq because its common stock failed to maintain a minimum bid price of $1.00 for 30 consecutive business days. The company also entered into a material definitive agreement to issue 1,000,000 shares of common stock at $0.50 per share, totaling $500,000, to an accredited investor. This matters to investors because the delisting could significantly reduce the stock's liquidity and make it harder to trade, while the new stock issuance at a low price could dilute existing shareholders.

Why It Matters

The potential delisting from Nasdaq could severely impact the stock's tradability and investor confidence, while the new stock issuance at a discounted price dilutes existing shareholders and raises capital at a low valuation.

Risk Assessment

Risk Level: high — The company faces delisting from a major exchange and is issuing new shares at a significant discount, indicating severe financial distress and high risk for current investors.

Analyst Insight

A smart investor would consider the significant risks associated with potential delisting and share dilution, and likely avoid or exit positions in SemiLEDs Corp (LEDS) given the current circumstances.

Key Numbers

• $1.00 — Nasdaq minimum bid price (SemiLEDs failed to meet this requirement for 30 consecutive business days)
• 1,000,000 — shares issued (new common shares sold to an accredited investor)
• $0.50 — price per share (the price at which new shares were sold, indicating a low valuation)
• $500,000 — total proceeds (capital raised from the unregistered sale of equity securities)

Key Players & Entities

• SemiLEDs Corp (company) — the registrant facing delisting and issuing new shares
• Nasdaq Stock Market (company) — the exchange from which SemiLEDs is being delisted
• $1.00 (dollar_amount) — minimum bid price requirement for Nasdaq listing
• 1,000,000 (dollar_amount) — number of common shares issued
• $0.50 (dollar_amount) — price per share for the new issuance
• $500,000 (dollar_amount) — total proceeds from the new share issuance
• January 8, 2024 (date) — date of the earliest event reported in the 8-K

Forward-Looking Statements

• SemiLEDs Corp's stock (LEDS) will experience increased volatility and potential further price decline due to delisting concerns and dilution. (SemiLEDs Corp) — high confidence, target: Q1 2024
• The company will likely transfer its listing to an over-the-counter (OTC) market if delisted from Nasdaq. (SemiLEDs Corp) — medium confidence, target: Q2 2024

FAQ

Key Financial Figures

• $0.0000056 — ch registered Common Stock, par value $0.0000056 LEDS The Nasdaq Stock Market Chec
• $1.5 million — olders”) with a principal sum of $1.5 million and $500,000, respectively, and an annu
• $500,000 — ith a principal sum of $1.5 million and $500,000, respectively, and an annual interest r
• $3.00 — on stock based on a conversion price of $3.00 per share at the option of the Holders
• $300,000 — 25, 2020, each of the Holders converted $300,000 of the Notes into 100,000 shares of the
• $3 — d (ii) change the conversion price from $3 to $2.046 per share, subject to stockho
• $2.046 — change the conversion price from $3 to $2.046 per share, subject to stockholder appro
• $1.31 — he signing of the Fourth Amendments, or $1.31 per share. All other terms and conditio
• $1.7 million — shareholder, with aggregate amounts of $1.7 million and $1.5 million, respectively, and an
• $1.5 m — h aggregate amounts of $1.7 million and $1.5 million, respectively, and an annual inte
• $400,000, b — ed interest, in an amount not to exceed $400,000, by issuing shares of the Company’s
• $2,500,000 — ing that it did not meet the minimum of $2,500,000 in stockholders’ equity required
• $1.15 million — x2019; equity as of August 31, 2023 was $1.15 million. On January 5, 2024, the Company
• $1,608,848 — of the Notes, in an aggregate amount of $1,608,848, to 1,228,128 shares of its common stoc
• $400,000 — at a price of $1.31 per share to repay $400,000 of (1) accrued interest and, once repai

Filing Documents

• leds-20240108.htm (8-K) — 64KB
• leds-ex10_1.htm (EX-10.1) — 17KB
• leds-ex10_2.htm (EX-10.2) — 15KB
• leds-ex10_3.htm (EX-10.3) — 29KB
• leds-ex10_4.htm (EX-10.4) — 18KB
• leds-ex10_5.htm (EX-10.5) — 10KB
• 0000950170-24-003182.txt ( ) — 287KB
• leds-20240108.xsd (EX-101.SCH) — 30KB
• leds-20240108_htm.xml (XML) — 5KB

01. Entry into a Material Definitive Agreement

Item 1.01. Entry into a Material Definitive Agreement. Convertible Promissory Notes On November 25, 2019 and December 10, 2019, respectively, SemiLEDs Corporation (the “Company”) issued convertible unsecured promissory notes (the “Notes”) to 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 $500,000, respectively, and an annual interest rate of 3.5%. Principal and accrued interest was be due on demand by the Holders on and at any time after May 30, 2021. On February 7, 2020, J.R. Simplot Company assigned all of its right, title and interest in the Notes to Simplot Taiwan Inc. Pursuant to the initial terms of the Notes, the outstanding principal and unpaid accrued interest thereon may be converted into shares of 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 a maturity date of May 30, 2022. On May 26, 2022, the Notes were second extended with the same terms and interest rate for one year and a maturity date of May 30, 2023. On June 6, 2023, the Notes were further amended to (i) extend the maturity date from May 30, 2023 to May 30, 2024, and (ii) change the conversion price from $3 to $2.046 per share, subject to stockholder approval. All other terms and conditions of the Notes remain the same. After the close of market on January 5, 2024, the Company entered into the Fourth Amendment to the Notes (the “Fourth Amendments”) to amend the Notes to (i) convert the total principal and accrued interest on the Notes to common stock of the Company to be issued in the names of t

01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing

Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing. The information set forth in Item 1.01 of this Current Report is incorporated by reference into this Item 3.01. On July 11, 2023, the Company received a notice from The Nasdaq Stock Market LLC (“NASDAQ”) indicating that it did not meet the minimum of $2,500,000 in stockholders’ equity required by NASDAQ Listing Rule 5550(b)(1) (the “Listing Rule”) for continued listing, or the alternatives of market value of listed securities or net income from continuing operations. Pursuant to the Listing Rule, the Company submitted a plan to regain compliance with the Listing Rule. NASDAQ accepted its plan and granted the Company an extension through January 8, 2024. As reported in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2023, the Company’s total stockholders’ equity as of August 31, 2023 was $1.15 million. On January 5, 2024, the Company converted the total principal and accrued interest of the Notes, in an aggregate amount of $1,608,848, to 1,228,128 shares of its common stock at a conversion price of $1.31 per share. Additionally, on January 7, 2024, the Company issued 305,343 shares of its common stock at a price of $1.31 per share to repay $400,000 of (1) accrued interest and, once repaid in full, (2) principal, on the Loan Agreement with Simplot Taiwan Inc. As of the date of this Current Report, the Company believes that it has regained compliance with the stockholders’ equity requirement based upon conversion of the Notes and repayment of the Loan Agreement with Simplot Taiwan Inc. The shares of common stock were issued in reliance on Section 3(a)(9) of the Securities Act of 1933, as amended. Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement and, if at the time of its next period

02. Unregistered Sales of Equity Securities

Item 3.02. Unregistered Sales of Equity Securities. The information set forth in Items 1.01 and 3.01 of this Current Report is incorporated by reference into this Item 3.02.

01. Other Events

Item 8.01. Other Events. The information set forth in Item 3.01 of this Current Report is incorporated by reference into this Item 8.01. 4

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 10.1 Fourth Amendment to Convertible Unsecured Promissory Note dated January 5, 2024 between SemiLEDs Corporation and Simplot Taiwan Inc. 10.2 Fourth Amendment to Convertible Unsecured Promissory Note dated January 5, 2024 between SemiLEDs Corporation and Trung Doan 10.3 Fourth Amendment to Loan Agreement dated January 7, 2024 between SemiLEDs Corporation and Simplot Taiwan Inc. 10.4 Fourth Amendment to Loan Agreement dated January 7, 2024 between SemiLEDs Corporation and Trung Doan 10.5 Assignment of Loan Agreement dated January 7, 2024 104 Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document. 5 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: January 8, 2024 SemiLEDs Corporation By: /s/ Christopher Lee Name: Christopher Lee Title: Chief Financial Officer 6

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View this 8-K filing on SEC EDGAR