SemiLEDs Corporation, "SemiLEDs" or the "Company," a developer and manufacturer of LED chips and LED components, today announced its financial results for the third quarter of fiscal year 2016, ended May 31, 2016.

Revenue for the third quarter of fiscal 2016 was US $2.4 million, an 18% decrease compared to $2.9 million in the second quarter of fiscal 2016. GAAP net loss attributable to SemiLEDs stockholders for the third quarter of fiscal 2016 was $3.3 million, compared to a loss of $2.5 million in the second quarter of 2016, or a net loss of $1.11 per diluted share, compared to a net loss of $0.87 per diluted share for the second quarter of fiscal 2016.

"The transition toward the fabless business model has taken longer than we anticipated; however, we still believe it is the right model," said Trung Doan, Chairman, President and CEO. "This should help us to lower our cash needs while evaluating other potential business opportunities," concluded Doan.

On a non-GAAP basis, net loss attributable to SemiLEDs stockholders for the third quarter of fiscal 2016 was $3.1 million, or a net loss of $1.06 per diluted share, compared to non-GAAP net loss attributable to SemiLEDs stockholders of $2.2 million, or a loss of $0.77 in the second quarter of 2016.

GAAP gross margin for the third quarter of fiscal 2016 was negative 61%, compared with gross margin for the second quarter of fiscal 2016 of negative 27%. Operating margin for the third quarter of fiscal 2016 was negative 132%, compared with negative 95% in the second quarter of fiscal 2016. The Company's cash and cash equivalents was $3.5 million at May 31, 2016, compared to $5.3 million at the end of the second quarter of fiscal 2016. Cash used in operating activities was $1.3 million in the third quarter of fiscal 2016, compared with $1.0 million in the second quarter of fiscal 2016.

On July 6, 2016, we entered into a purchase agreement with Peter Chiou to purchase 577,000 newly issued shares of the Company's common stock at $5.00 per share. This represents approximately 19.6% of the outstanding shares of the Company. Chiou has also agreed to purchase a $1,615,000 SemiLEDs Corporation's 0% interest convertible note (the "Note") with a September 29, 2017 maturity date. Subject to shareholder approval at the Company's next shareholders meeting, the Note will be convertible into a number of shares of the Company's common stock equal to the quotient obtained by dividing (x) $1,615,000 by (y) the conversion price, which is equal to the lesser of $3.40 or the 5-trading day volume weighted average price of the common stock on the NASDAQ Stock Market ending on the maturity date.

These investments are expected to be funded to SemiLEDs Corporation in three installments as follows:

1. 1st installment of $1,000,000 has been received.

2. 2nd installment of $1,885,000 will be wired to the Company on or before August 15, 2016. Upon completion of the share purchase, Dr. Chiou will be appointed a member of SemiLEDs Corporations' Board of Directors; Dr. Chiou has agreed to waive any compensation for his services on the Board.

3. 3rd installment of $1,615,000 will be wired to the Company on or before September 29, 2016.

There is no assurance that we can successfully close the financing or if Dr. Chiou is able to meet the remaining funding requirements of the purchase agreement.

We expect revenue for the fourth quarter ending August 31, 2016 to be $2.0 million to $2.5 million.