5. 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 February 2018 and December 2020. Lease expense related to these noncancellable operating leases were $112 thousand for both three months ended November 30, 2017 and 2016. Lease expense is recognized on a straight-line basis over the term of the lease.

The aggregate future noncancellable minimum rental payments for the Company’s operating leases as of November 30, 2017 consisted of the following (in thousands):

	Operating
Years Ending August 31,	Leases
Remainder of 2018	$	208
2019		96
2020		96
2021		32
2022		—
Thereafter		—
Total	$	432

Purchase Obligations —The Company had purchase commitments for inventory, property, plant and equipment in the amount of $1.5 million as of both November 30, 2017 and August 31, 2017.

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. The Company recognizes a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. 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.

On June 21, 2017, Well Thrive Ltd. (“Well Thrive”) filed a complaint against SemiLEDs Corporation in the United States District Court for the District of Delaware. The complaint alleges that Well Thrive is entitled to return of $500 thousand paid toward a note purchase pursuant to a purchase agreement (the “Purchase Agreement”) effective July 6, 2016 with Dr. Peter Chiou, which was assigned to Well Thrive on August 4, 2016. Pursuant to the terms of the Purchase Agreement, we have retained the $500 thousand payment as liquidated damages. Well Thrive alleges that the liquidated damages provision is unenforceable as an illegal penalty and does not reflect the amount of purported damages.

Well Thrive and the Company are currently negotiating a mutual release agreement, but there can be no assurance if or when the agreement will be executed.

Except as described above, as of November 30, 2017, 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.