Key Factors Affecting Our Financial Condition, Results of Operations and Business
The following are key factors that we believe affect our financial condition, results of operations and business:
Components of Consolidated Statements of Operations
Our core products are LED components, LED modules and systems, which are the most important part of our business, as well as LED chips and lighting products.
Our customers consist primarily of packagers, ODMs and endcustomers. Our revenues attributable to our ten largest customers accounted for 88% and 82% of our revenues for the years ended August 31, 2022 and 2021, respectively.
Our revenues are presented net of estimated sales returns and discounts. We estimate sales returns and discounts based on our historical discounts and return rates and our assessment of future conditions.
Our cost of revenues also includes excess capacity charges as a result of the underutilization of our manufacturing capacity and inventory valuation adjustments to write down our inventories to their estimated net realizable values as a result of declines in their average selling prices.
Research and development. Our research and development expenses, which are expensed as incurred, consist primarily of expenses related to employee salaries, bonuses and other benefits (including stockbased compensation expenses) for our research and development personnel, engineering charges related to product design, purchases of materials and supplies, repairs and maintenance and depreciation related expenses.
Useful Life of Property, Plant and Equipment
Impairment of Longlived Assets
Critical Accounting Policies and Estimates
Year Ended August 31, 2022 Compared to Year Ended August 31, 2021
(1) Other includes primarily revenues attributable to the sale of epitaxial wafers, scraps and raw materials, the provision of services and the lease of manufacturing as well as research and development facilities.
Revenues attributable to the sales of our LED chips represented 2% and 4%, respectively, of our revenues for the years ended August 31, 2022 and 2021, respectively, and the slight decrease was primarily due to a lower volumes of LED chips sold in the fiscal year ended August 31, 2022.
Interest expenses, net. Interest expenses, net which primarily consisted of accrued interest on convertible notes, NT dollar denominated long-term notes and $3.2 million of loans with our Chairman and Chief Executive Officer and our largest shareholder. The decrease in interest expenses, net was insignificant.
Other income, net. Other income, net increase from $1 million for the years ended August 31, 2021 to $1.5 million for the year ended August 31, 2022, primarily due to higher rental income and payments received under the new Patent Cross-License Agreement with CrayoNano AS.
Net Income (Loss) Attributable to Noncontrolling Interests
This section includes a discussion and analysis of our cash requirements, contingencies, sources and uses of cash, operations, working capital and long-term assets and liabilities.
Sources and Uses of Cash
Our long-term liabilities consist primarily long-term debt and operating lease liabilities.
Property, plant and equipment pledged as collateral for our notes payable were $2.8 million and $3.5 million as of August 31, 2022 and 2021, respectively.
The following summary of our cash flows for the periods indicated has been derived from our consolidated financial statements, which are included elsewhere in this Annual Report on Form 10K (in thousands):
Cash Flows Used in Operating Activities
Cash Flows (Used in) Provided by Investing Activities
Cash Flows Provided by Financing Activities
Net cash provided by financing activities was $490 thousand for the year ended August 31, 2022, consisting primarily of $995 thousand from the issuance of common stock under the ATM program, partially offset by $482 thousand in repayment of long-term debt.
Net cash provided by financing activities was $4.0 million for the year ended August 31, 2021, consisting primarily of $4.2 million from the issuance of common stock in our ATM program.
monitor prices and, consistent with its existing contractual commitments, may decrease its activity level and capital expenditures as appropriate.
Accounting Pronouncements Not Yet Adopted
Please refer to 'Summary of Significant Accounting Policies Recent Accounting Pronouncements' for more details.
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