[10-Q] GCT Semiconductor Holding, Inc. Quarterly Earnings Report
GCT Semiconductor Holding (GCTS) filed its Q3 2025 10‑Q. Net revenues fell to $430 thousand from $2.61 million a year ago, producing a gross loss of $1.05 million versus a prior gross profit of $1.63 million. Operating loss widened to $9.25 million, and net loss increased to $13.85 million (vs. $7.12 million).
Year‑to‑date, net revenues were $2.11 million (vs. $7.34 million) with a net loss of $34.36 million. Cash and cash equivalents were $8.34 million at September 30, 2025, up from $1.44 million at year‑end, supported by financing: an ATM program generated $1.4 million net proceeds and a May 2025 registered direct offering provided $9.9 million. The company has the right to sell up to $50.0 million under a common stock purchase agreement and had utilized $9.9 million of that capacity through quarter‑end.
Total current liabilities rose to $87.11 million, including borrowings of $59.41 million and current convertible promissory notes of $5.29 million. Stockholders’ deficit increased to $(80.15) million. Management states that these conditions raise substantial doubt about continuing as a going concern. Shares outstanding were 57,099,558 as of November 7, 2025.
- None.
- Going concern uncertainty: management states substantial doubt about the company’s ability to continue as a going concern due to losses, limited cash ($8.34 million), and large near‑term obligations ($87.11 million current liabilities).
Insights
Severe revenue drop and heavy near-term liabilities drive going-concern risk.
GCT Semiconductor reported Q3 net revenues of
Liquidity relies on external financing: cash was
Management explicitly notes substantial doubt about going concern. Actual impact will depend on access to the
Table of Contents
00
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Not Applicable
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.
Large accelerated filer |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No
As of November 7, 2025, the registrant had
Table of Contents
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10‑Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about our financial condition, results of operations, earnings outlook and our prospects. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements are based on the current expectations of our management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
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Table of Contents
A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” contained in our Annual Report on Form 10‑K filed with the Securities and Exchange Commission (“SEC”) on March 25, 2025. These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10‑Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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Table of Contents
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Part I. |
FINANCIAL INFORMATION |
1 |
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Item 1. |
Financial Statements (Unaudited) |
1 |
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Condensed Consolidated Balance Sheets |
1 |
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Condensed Consolidated Statements of Operations |
2 |
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Condensed Consolidated Statements of Comprehensive Loss |
3 |
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Condensed Consolidated Statements of Stockholders’ Deficit |
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Condensed Consolidated Statements of Cash Flows |
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Notes to Unaudited Condensed Consolidated Financial Statements |
7 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
24 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
36 |
Item 4. |
Controls and Procedures |
37 |
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Part II. |
OTHER INFORMATION |
38 |
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Item 1. |
Legal Proceedings |
38 |
Item 1A. |
Risk Factors |
38 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
39 |
Item 3. |
Defaults Upon Senior Securities |
39 |
Item 4. |
Mine Safety Disclosures |
39 |
Item 5. |
Other Information |
39 |
Item 6. |
Exhibits |
40 |
Signatures |
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41 |
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Table of Contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Balance Sheets
(unaudited, in thousands, except per share amounts)
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September 30, 2025 |
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December 31, 2024 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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Accounts receivable, net |
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Inventory |
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Contract assets |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Intangibles, net |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Deficit |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Contract liabilities |
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Accrued and other current liabilities |
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Common stock forward liability |
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Borrowings |
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Convertible promissory notes, current |
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Operating lease liabilities, current |
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Total current liabilities |
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Convertible promissory notes, net of current |
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Net defined benefit liabilities |
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Long-term operating lease liabilities |
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Income taxes payable |
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Warrant liabilities |
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Other liabilities |
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Total liabilities |
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Commitments and contingencies (Note 7) |
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Stockholders’ deficit: |
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Preferred stock, par value $ |
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— |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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( |
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Total stockholders’ deficit |
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( |
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( |
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Total liabilities and stockholders’ deficit |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
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Three Months Ended |
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Nine Months Ended |
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2025 |
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2024 |
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2025 |
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2024 |
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Net revenues: |
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Product |
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$ |
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$ |
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$ |
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Service |
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Total net revenues |
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Cost of net revenues: |
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Product |
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Service |
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Total cost of net revenues |
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Gross profit (loss) |
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Operating expenses: |
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Research and development |
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Sales and marketing |
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General and administrative |
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Gain on extinguishment of liability |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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( |
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( |
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Interest expense |
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( |
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( |
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( |
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( |
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Gain (loss) on foreign currency transactions, net |
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( |
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( |
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Change in fair value of common stock forward liability |
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( |
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Change in fair value of common stock warrant liabilities |
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( |
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( |
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Change in fair value of convertible promissory notes |
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( |
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( |
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( |
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( |
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Other income (expenses), net |
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( |
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( |
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Loss before provision for income taxes |
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( |
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( |
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( |
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Provision for income taxes |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Net loss per common share: |
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Basic and diluted |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Weighted average common shares outstanding: |
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Basic and diluted |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited, in thousands)
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Three Months Ended |
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Nine Months Ended |
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2025 |
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2024 |
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2025 |
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2024 |
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Comprehensive loss, net of taxes: |
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Net loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
( |
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Foreign currency translation adjustment |
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( |
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( |
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Comprehensive loss |
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$ |
( |
) |
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$ |
( |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(unaudited, in thousands)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Deficit |
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Balance as of December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of common stock under common |
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— |
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— |
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— |
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Issuance of common stock upon exercise |
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— |
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— |
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— |
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Release of vested restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Shares withheld related to net share |
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( |
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— |
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( |
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— |
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— |
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( |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of March 31, 2025 |
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( |
) |
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( |
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Issuance of common stock under common |
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— |
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— |
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— |
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Issuance of common stock under at-market |
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— |
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— |
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— |
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Issuance of common stock and common |
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— |
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— |
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Issuance of common stock upon exercise |
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— |
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— |
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— |
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Release of vested restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of June 30, 2025 |
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( |
) |
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( |
) |
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( |
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Issuance of common stock under at-market |
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— |
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— |
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— |
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Issuance of common stock upon exercise |
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— |
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— |
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— |
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— |
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— |
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Release of vested restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Foreign currency translation adjustment |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Statements of Stockholders’ Deficit
(unaudited, in thousands)
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Accumulated |
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Additional |
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Other |
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Total |
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Common Stock |
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Paid-In |
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Comprehensive |
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Accumulated |
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Stockholders’ |
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Shares |
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Amount |
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Capital |
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Income (Loss) |
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Deficit |
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Deficit |
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Balance as of December 31, 2023 |
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|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Reverse recapitalization transaction, net of |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Balance as of March 31, 2024 |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Issuance of common stock under common |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of commitment shares in connection |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Issuance of common stock to underwriter |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
||||
Issuance of common stock under common |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock and common |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Issuance of common stock upon exercise |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Forfeiture of unvested sponsor earnout shares |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Foreign currency translation adjustment |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance as of September 30, 2024 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Condensed Consolidated Statements of Cash Flows
(unaudited, in thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Operating activities: |
|
|
|
|
|
|
||
Net loss |
|
$ |
( |
) |
|
$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of right-of-use assets |
|
|
|
|
|
|
||
Stock-based compensation |
|
|
|
|
|
|
||
Issuance of common stock to underwriter |
|
|
— |
|
|
|
|
|
Change in provision for credit losses |
|
|
|
|
|
( |
) |
|
Change in fair value of common stock forward liability |
|
|
( |
) |
|
|
|
|
Change in fair value of warrant liabilities |
|
|
|
|
|
( |
) |
|
Change in fair value of convertible promissory notes |
|
|
|
|
|
|
||
Gain on extinguishment of liability |
|
|
— |
|
|
|
( |
) |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
Accounts receivable |
|
|
|
|
|
( |
) |
|
Inventory |
|
|
|
|
|
( |
) |
|
Contract assets |
|
|
( |
) |
|
|
( |
) |
Prepaid expenses and other current assets |
|
|
|
|
|
( |
) |
|
Other assets |
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
( |
) |
|
Contract liabilities |
|
|
( |
) |
|
|
|
|
Accrued and other current liabilities |
|
|
|
|
|
( |
) |
|
Net defined benefit liabilities |
|
|
|
|
|
|
||
Income taxes payable |
|
|
( |
) |
|
|
|
|
Lease liabilities |
|
|
( |
) |
|
|
( |
) |
Other liabilities |
|
|
( |
) |
|
|
( |
) |
Net cash used in operating activities |
|
|
( |
) |
|
|
( |
) |
Investing activities: |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
( |
) |
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Financing activities: |
|
|
|
|
|
|
||
Proceeds from borrowings |
|
|
|
|
|
|
||
Proceeds from issuance of common stock under common stock purchase agreement |
|
|
|
|
|
|
||
Proceeds from issuance of common stock under at-market agreement |
|
|
|
|
|
— |
|
|
Proceeds from issuance of common stock and common stock warrants in a private placement |
|
|
— |
|
|
|
|
|
Proceeds from issuance of common stock and common stock warrants in a registered direct offering |
|
|
|
|
|
— |
|
|
Proceeds from exercise of stock options |
|
|
|
|
|
|
||
Payment of common stock issuance costs |
|
|
( |
) |
|
|
— |
|
Tax withholding on restricted stock units |
|
|
( |
) |
|
|
— |
|
Proceeds from reverse recapitalization and PIPE Financing, net of transaction costs |
|
|
— |
|
|
|
|
|
Proceeds from issuance of convertible promissory notes |
|
|
— |
|
|
|
|
|
Repayments of borrowings |
|
|
( |
) |
|
|
( |
) |
Repayments of convertible promissory notes |
|
|
— |
|
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Effect of exchange rate changes on cash and cash equivalents |
|
|
|
|
|
( |
) |
|
Net increase in cash and cash equivalents |
|
|
|
|
|
|
||
Cash and cash equivalents at beginning of period |
|
|
|
|
|
|
||
Cash and cash equivalents at end of period |
|
$ |
|
|
$ |
|
||
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
|
|
$ |
|
||
Cash paid for income taxes |
|
$ |
|
|
$ |
|
||
Cash paid for operating leases |
|
$ |
|
|
$ |
|
||
Non-cash financing activities: |
|
|
|
|
|
|
||
Issuance of common stock from conversion of convertible promissory notes |
|
$ |
— |
|
|
$ |
|
|
Settlement of common stock forward liability in equity |
|
$ |
— |
|
|
$ |
|
|
Proceeds from issuance of common stock withheld for outstanding payables |
|
$ |
— |
|
|
$ |
|
|
Operating lease right-of-use assets obtained in exchange for operating lease liabilities |
|
$ |
|
|
$ |
|
||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization and Liquidity
Description of Business
GCT Semiconductor Holding, Inc. (formerly known as Concord Acquisition Corp III) and its wholly owned subsidiaries (collectively “GCT” or the “Company”) is headquartered in San Jose, California, with international offices in South Korea, China, Taiwan, and Japan. The Company is a fabless semiconductor company that specializes in the design, manufacturing, and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers and modems, which are essential for a wide variety of industrial, business-to-business (“B2B”) and consumer applications.
On March 26, 2024 (the “Closing Date” or “Closing”), Concord Acquisition Corp III (“Concord III”), a Delaware corporation, consummated a series of transactions that resulted in the combination of Gibraltar Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Concord III (“Merger Sub”), and GCT Semiconductor, Inc. (“Legacy GCT”), pursuant to a Business Combination Agreement, dated November 2, 2023 (as amended, the “Business Combination Agreement”), by and among Concord III, Merger Sub and Legacy GCT. Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy GCT, with Legacy GCT surviving the merger as a wholly-owned subsidiary of Concord III (the “Business Combination”). On the Closing Date, Concord III changed its name from Concord III to “GCT Semiconductor Holding, Inc.”
The Business Combination was accounted for as a reverse recapitalization with Legacy GCT being the accounting acquirer and Concord III identified as the acquired company for accounting purposes. Subsequent to the Business Combination, the shares and net loss per common share information prior to the Closing have been retroactively restated as shares reflecting the exchange ratio established in the Closing of approximately
Prior to the Business Combination, Concord III’s public shares and public redeemable warrants were listed on the New York Stock Exchange (“NYSE”) under the symbols “CNDB.U,” “CNDB,” and “CNDB.WS,” respectively. On March 27, 2024, the Company’s common stock and public warrants began trading on the NYSE under the symbols “GCTS” and “GCTSW,” respectively. In connection with the Closing, Concord III’s Class A common stock and Class B common stock were recapitalized into a single class of common stock.
Liquidity
The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. Through September 30, 2025, the Company has incurred operating losses and negative cash flows from operating activities and had an accumulated deficit of $
In April 2024, the Company executed a common stock purchase agreement (“Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell, from time to time, B. Riley up to $
On April 1, 2025, the Company executed an at-market issuance sales agreement (“ATM Agreement”) with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, acting as sales agents. The ATM Agreement allows the Company to sell its common stock for gross proceeds of up to $
On May 15, 2025, the Company entered into securities purchase agreements (“RDO Purchase Agreements”) with certain institutional investors (“Purchasers”) pursuant to which, the Company sold shares of common stock and warrants to purchase common stock to the Purchasers and received net proceeds of $
To fund its operations over the longer term, the Company will need to start generating positive cash flows, renegotiate its existing debt obligations, and raise additional capital through debt or equity financing. Management’s plans include seeking additional financing, such as issuances of equity and issuances of debt and/or convertible debt instruments. Sales of additional equity securities, convertible debt, and/or warrants by the Company could result in the dilution of the interests of existing stockholders. The Company will require
7
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
significant additional financing to meet its planned capital needs and is pursuing opportunities to obtain additional financing through equity and/or debt alternatives. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to the Company or at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern beyond twelve months after the date that these unaudited condensed consolidated financial statements are issued. The accompanying unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
2. Summary of Significant Accounting Policies and Basis of Presentation
Principles of Consolidation and Basis of Presentation
The unaudited condensed consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of intercompany balances and transactions. The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim financial information. Certain information and disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2024, which are included in the Company’s Form 10‑K filed with the SEC on March 25, 2025.
The information as of December 31, 2024 included in the unaudited condensed consolidated balance sheets was derived from the audited consolidated financial statements. Certain amounts reported in the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 have been reclassified to conform to the current year’s presentation.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial information. The unaudited condensed consolidated results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period.
There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Use of Estimates
The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates, and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. These judgments, estimates, and assumptions are used for but not limited to revenue recognition, provision for credit losses, deferred income taxes and related valuation allowances, inventory obsolescence, recoverability of long-lived assets, certain accrued expenses, stock-based compensation, determination of the fair value of the Company’s financial instruments, including convertible promissory notes, warrant liabilities, stock options, and common stock forward liability. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from these estimates, and these differences may be material.
Risk and Uncertainties
The Company is subject to certain risks and uncertainties and believes changes in any of the following areas could have a material adverse effect on the Company’s future financial position or results of operations or cash flows: 5G and other new product development, including market receptivity, the ability to satisfy obligations under development agreements with major partners, litigation or claims against the Company based on intellectual property, patent, product regulation or other factors, competition from other products, general economic conditions, the ability to attract and retain qualified employees and ultimately to sustain profitable operations.
The semiconductor industry is characterized by rapid technological change, competition, competitive pricing pressures, and cyclical market patterns. The Company’s financial results are affected by a wide variety of factors, such as general economic conditions specific to the semiconductor industry and the Company’s particular market, the timely implementation of new 5G and other new products, new manufacturing process technologies, and the ability to safeguard patents and intellectual property in a rapidly evolving market. In addition, the semiconductor market has historically been cyclical and subject to significant economic downturns. As a result, the
8
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Company may experience significant period-to-period fluctuations in the unaudited condensed consolidated operating results due to the abovementioned factors.
The Company’s revenue may be impacted by its ability to obtain adequate wafer supplies from foundries and back-end production capacity from the Company’s test and assembly subcontractors. The foundries with which the Company currently has arrangements may not be willing or able to satisfy all of the Company’s manufacturing requirements on a timely basis or at favorable prices. The Company is also subject to the risks of service disruptions, raw material shortages, and price increases by its foundries. Such disruptions, shortages, and price increases could harm the Company’s consolidated operating results.
Provision for Credit Losses
The provision for credit losses is based on the Company’s assessment of the collectibility of its customer accounts. The Company reviews the provision for credit losses by considering certain factors such as historical experience, industry data, credit quality, age of balances, and current economic conditions that may affect a customer’s ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted, and recoveries are recognized when they are recovered. The Company has recorded provisions for credit losses of approximately $
Revenue Recognition
The Company’s revenues are generated by the sale of 4G and 5G mobile semiconductor solutions consisting of product and platform solutions aimed at the 4G LTE and 5G NR (New Radio) wireless communications industry, and related development services and technical advice and maintenance services. To determine when revenues are recognized, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligation in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation.
The revenues from product sales are identified and determined pursuant to purchase orders. The Company considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the product, which is generally at the time of shipment.
Service revenues are identified and determined based on each service agreement and recognized over time or at a point in time, depending on the evaluation of when the customer obtains control of the promised goods or services, which is generally as services are rendered. For contracts that include multiple performance obligations, the Company allocates revenue to each performance obligation based on estimates of the relative stand-alone selling price that the Company would charge the customer for each promised product or service.
All product revenue presented in the unaudited condensed consolidated statements of operations is recognized at a point in time, and all service revenue is recognized over time.
Concentration of Credit Risk
The Company’s financial instruments subject to credit risk concentration consist of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents primarily with one financial institution located in the United States and another located in South Korea, where amounts deposited may exceed Federal Deposit Insurance Corporation or Korea Deposit Insurance Corporation limits. The Company’s accounts receivable balances are primarily derived from revenues recognized from customers located in the United States, China, South Korea, Japan, and Taiwan. The Company performs ongoing credit evaluations of the financial condition of its customers and distributors and generally does not require collateral.
9
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The Company’s net revenues and accounts receivable are concentrated among a few significant customers, which could expose the Company to financial risk in the event of adverse developments.
Customer |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Customer B |
|
|
% |
|
|
% |
||
Customer F |
|
|
% |
|
|
% |
||
Customer H |
|
|
% |
|
|
% |
||
Customer K |
|
|
% |
|
|
% |
||
The following table includes customers that individually accounted for more than 10% of the Company’s net revenues in the periods indicated:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
Customer |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Customer A |
|
|
|
*% |
|
|
|
*% |
|
|
% |
|
|
|
*% |
|
Customer B |
|
|
% |
|
|
— |
% |
|
|
|
*% |
|
|
— |
% |
|
Customer F |
|
|
— |
% |
|
|
% |
|
|
— |
% |
|
|
% |
||
Customer K |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
% |
|
Customer L |
|
|
|
*% |
|
|
|
*% |
|
|
|
*% |
|
|
% |
|
Customer M |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Customer O |
|
|
% |
|
|
— |
% |
|
|
% |
|
|
— |
% |
||
Customer P |
|
|
% |
|
|
— |
% |
|
|
|
*% |
|
|
— |
% |
|
*Less than 10%.
Management closely monitors the creditworthiness and performance of these key customers and has established credit limits and terms to mitigate potential credit risks. The Company also continues diversifying its customer base and exploring opportunities to reduce its reliance on a few major customers.
Foreign Currency
Financial statements of foreign subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at the end-of-period exchange rates or at historical exchange rates for purposes of consolidation. Revenues and expenses are translated using average exchange rates during the reporting period. Translation adjustments are included in accumulated other comprehensive income or loss within stockholders’ deficit.
Gains and losses resulting from transactions denominated in a currency other than the functional currency are presented separately in the unaudited condensed consolidated statements of operations.
For the three and nine months ended September 30, 2025, the Company recognized realized foreign currency exchange losses of
For the three and nine months ended September 30, 2024, the Company recognized realized foreign currency exchange gains of $
Convertible Promissory Notes
The Company has elected the fair value option to account for its outstanding convertible promissory notes, with changes in estimated fair value presented separately under the corresponding caption in the unaudited condensed consolidated statements of operations. Through September 30, 2025, there were no changes in the instrument-specific credit risk that are required to be presented as a component of other comprehensive loss.
10
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Other Comprehensive Income (Loss)
Other comprehensive income (loss) includes all changes within equity that are not the result of transactions with stockholders. Accumulated other comprehensive income (loss) includes foreign currency translation adjustments arising from the consolidation of the Company’s foreign subsidiaries.
Common Stock Warrants
Common stock warrants are classified as liabilities if they do not meet equity classification requirements based on their settlement mechanism upon a change of control and similar transactions. The corresponding liability is remeasured at fair value while the common stock warrants remain outstanding, with changes in fair value presented separately in the unaudited condensed consolidated statements of operations. Common stock warrants that meet equity classification requirements are credited to stockholders’ deficit on their issuance dates and are not subsequently remeasured.
Segment Information
The Company operates in
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS” Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards using private company timelines. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, companies are required to disclose additional information about income taxes paid. ASU 2023-09 is effective for the Company as an emerging growth filer for annual periods beginning after December 15, 2025, with early adoption permitted. The standard is required to be adopted on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the effect of the adoption of ASU 2023-09 on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to provide disaggregated disclosures of certain expense captions presented on the face of the income statement into specific categories within the notes to the consolidated financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements and related disclosures.
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure expected credit losses on accounts receivable and contract assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the timing of the adoption and the impact of ASU 2025-05 on its consolidated financial statements and related disclosures.
11
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) (“ASU 2025-07”). The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based noncash consideration from a customer in a revenue contract. The amendments in ASU 2025-07 are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-07 on its consolidated financial statements and related disclosures.
3. Disaggregation of Revenue
Net revenues are categorized by customer location as follows (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
United States |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Taiwan |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Germany |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
China |
|
|
|
|
|
|
|
|
|
|
|
|
||||
South Korea |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Contract Assets and Liabilities
Net revenues recognized during the nine months ended September 30, 2025 and 2024 for the amounts included in the contract liabilities balance at the beginning of the respective annual periods were not material in each period.
4. Fair Value of Measurements
Recurring Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis (in thousands):
|
|
September 30, 2025 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible promissory notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common stock forward liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
|
|
December 31, 2024 |
|
|||||||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Convertible promissory notes |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Warrant liabilities |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Common stock forward liability |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Valuation Techniques and Inputs
The table below presents valuation techniques and inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy (in thousands):
|
|
Valuation techniques |
|
Inputs |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Convertible promissory notes, current |
|
Binomial Lattice Model (“BLM”) |
|
Stock price, volatility, remaining term, risk-free rate, credit spread |
|
$ |
|
|
$ |
|
||
Warrant liabilities |
|
Black Scholes Merton |
|
Exercise price, term to expiration, volatility, risk-free rate |
|
|
|
|
|
|
||
Common stock forward liability |
|
Discounted Cash Flow (“DCF”) |
|
Various utilization scenarios, risk-free rate, remaining term |
|
|
|
|
|
|
||
12
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
As of September 30, 2025, the key inputs for the convertible promissory notes measured using the BLM were as follows: stock price of $
As of September 30, 2025, the key inputs used to measure the public and private placement warrants using the BLM and BSM were as follows: exercise price of $
As of September 30, 2025, the key inputs for the common stock forward valuation using the DCF model were as follows: a remaining term of
The following table sets forth a summary of the changes in the fair value of the convertible promissory notes (in thousands):
As of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
|
|
As of March 31, 2025 |
|
|
|
|
Change in fair value |
|
|
|
|
As of June 30, 2025 |
|
|
|
|
Change in fair value |
|
|
|
|
As of September 30, 2025 |
|
$ |
|
The following table sets forth a summary of the changes in the fair value of the warrant liabilities (in thousands):
As of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
As of March 31, 2025 |
|
|
|
|
Change in fair value |
|
|
|
|
As of June 30, 2025 |
|
|
|
|
Change in fair value |
|
|
|
|
As of September 30, 2025 |
|
$ |
|
The following table sets forth a summary of the changes in the fair value of the common stock forward liability (in thousands):
As of December 31, 2024 |
|
$ |
|
|
Change in fair value |
|
|
( |
) |
As of March 31, 2025 |
|
|
|
|
Change in fair value |
|
|
|
|
As of June 30, 2025 |
|
|
|
|
Change in fair value |
|
|
( |
) |
As of September 30, 2025 |
|
$ |
|
5. Balance Sheet Components
Inventory
Inventories consist of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Raw materials |
|
$ |
|
|
$ |
|
||
Work-in-process |
|
|
|
|
|
|
||
Finished goods |
|
|
|
|
|
|
||
Total inventory |
|
$ |
|
|
$ |
|
||
13
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
There were $
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Prepaid inventory |
|
$ |
|
|
$ |
|
||
Prepaid insurance and other expenses |
|
|
|
|
|
|
||
Lease deposit |
|
|
|
|
|
|
||
Other receivables and current assets |
|
|
|
|
|
|
||
Prepaid research and development |
|
|
— |
|
|
|
|
|
Total prepaid expenses and other current assets |
|
$ |
|
|
$ |
|
||
Accrued and other current liabilities
Accrued and other current liabilities consist of the following (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Payroll and related expenses |
|
$ |
|
|
$ |
|
||
Accrued payables |
|
|
|
|
|
|
||
Other taxes payable |
|
|
|
|
|
|
||
Interest payable |
|
|
|
|
|
|
||
Professional fees |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued and other current liabilities |
|
$ |
|
|
$ |
|
||
6. Debt
The Company’s outstanding debt was as follows (in thousands):
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
Outstanding |
|
|
Fair Value |
|
|
Outstanding |
|
|
Fair Value |
|
||||
Convertible promissory notes: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
2024 convertible promissory note |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Borrowings: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
KEB Hana Bank |
|
|
|
|
|
|
|
|
|
|
|
|
||||
IBK Industrial Bank |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Mujin Electronics Co., Ltd. |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Anapass, Inc., related party |
|
|
|
|
|
|
|
|
|
|
|
|
||||
i Best Investment Co., Ltd |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Kyeongho Lee, related party |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total debt |
|
$ |
|
|
|
|
|
$ |
|
|
|
|
||||
Less: current portion |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Debt, net of current portion |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
14
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Expected future minimum principal payments under the Company’s total debt are as follows as of September 30, 2025 (in thousands):
Years |
|
Convertible |
|
|
Borrowings |
|
|
Total |
|
|||
2025, remainder |
|
$ |
|
|
$ |
|
|
$ |
|
|||
2026 |
|
|
|
|
|
|
|
|
|
|||
Total debt |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Convertible Promissory Notes
2024 Convertible Promissory Notes
In February 2024, the Company issued a convertible promissory note to a strategic investor for a principal amount of $
Borrowings Pursuant to Term Loan and Security Agreements
The amounts in South Korean won (“KRW”) presented below were converted into U.S. dollars based on the applicable historical exchange rates.
KEB Hana Bank
In July 2016, the Company entered into an unsecured term loan agreement with KEB Hana Bank, pursuant to which it borrowed
IBK Industrial Bank
In January 2017, the Company entered into a term loan agreement with IBK Industrial Bank, pursuant to which the Company borrowed KRW
M-Venture Investment, Inc.
In October 2021, the Company entered into a term loan and security agreement with M-Venture Investment, Inc. pursuant to which the Company borrowed KRW
In April 2022, the Company entered into a term loan and security agreement with M-Venture Investment, Inc., pursuant to which the Company borrowed amounts in two draws of KRW
15
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The maturity date for the principal amount of KRW
Mujin Electronics Co., Ltd.
In July 2024, the Company executed agreement with M-Venture Investment, Inc. and Mujin Electronics Co., Ltd., in which Mujin Electronics Co., Ltd. fully assumed the remaining M-Venture Loan with the same principal amount of KRW
Anapass, Inc., Related Party
In July 2016, the Company entered into a loan agreement with Anapass, Inc. pursuant to which the Company borrowed KRW
In May and September 2022, the Company entered into two term loan agreements with Anapass, Inc. pursuant to which the Company borrowed KRW
In December 2024, the Company entered into a new term loan agreement with Anapass, Inc. pursuant to which the Company borrowed KRW
In August 2025, the Company entered into a term loan agreement with Anapass, Inc. pursuant to which the Company borrowed KRW
In September 2025, the Company entered into a term loan agreement with Anapass, Inc. pursuant to which the Company borrowed KRW
i Best Investment Co., Ltd
Between 2022 and 2023, the Company entered into multiple term loans and security agreements with i Best Investment Co., Ltd pursuant to which it borrowed principal amounts in six draws with an aggregate principal balance of KRW
16
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
In February 2025, the Company executed an amendment with i Best Co., Ltd. to extend the maturity date from
Kyeongho Lee, Related Party
Between 2017 and 2021, the Company entered into multiple promissory note and term loan agreements with Kyeongho Lee pursuant to which the Company borrowed (a) KRW
In November 2024, the Company entered into a term loan agreement with Kyeongho Lee pursuant to which the Company borrowed KRW
7. Commitments and Contingencies
Litigation
The Company is subject to various claims arising in the ordinary course of business. Although no assurance can be given, the Company believes that it is not a party to any litigation of which the outcome, if determined adversely, would individually, or in the aggregate, be reasonably expected to have a material adverse effect on the business, consolidated operating results, cash flows or financial position of the Company as of September 30, 2025.
Third parties have from time to time claimed, and others may claim in the future, that the Company has infringed their past, current or future intellectual property rights. These claims, whether meritorious or not, could be time-consuming, result in costly litigation, require expensive changes in the Company’s methods of doing business or could require the Company to enter into costly royalty or licensing agreements, if available. As a result, these claims could harm the Company’s business, consolidated operating results, cash flows, and financial position.
Purchase Commitments
The Company has certain commitments for outstanding purchase orders related to the manufacture of certain wafers utilized by the Company and other services that, once the wafers are placed into production, are noncancellable. Otherwise, these production agreements are cancellable at any time, with the Company required to pay all costs incurred through the cancellation date. However, the Company does not have a history of cancelling these agreements once production has started. As of September 30, 2025, the Company had outstanding noncancellable purchase commitments for these production agreements of $
17
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
Alpha Foundry Product Development Agreement
In February 2024, the Company and Alpha Holdings Co., Ltd. (“Alpha”) entered into a foundry product development agreement (“Alpha Agreement”) related to 5G chip development for a total fee of $
Assets Pledged as Collateral
The Company has provided collateral to Anapass, Inc., a related party (see Note 13), for borrowings from KEB Hana Bank, IBK Industrial Bank and Anapass, Inc. in the amount of $
The following table includes a summary of the carrying amounts related to collateral provided to Anapass, Inc. (in thousands):
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable |
|
|
|
|
|
|
||
Inventory |
|
|
|
|
|
|
||
Property and equipment |
|
|
|
|
|
|
||
Intangible and other assets |
|
|
|
|
|
|
||
8. Common Stock
B. Riley Purchase Agreement
Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell to B. Riley, from time to time, up to $
The Purchase Agreement was determined to be an equity-linked contract that contains a purchased put option on the Company’s common stock and variable share forward. These freestanding instruments are precluded from equity classification since the Purchase Agreement requires shareholder approval for the issuance of shares in excess of the applicable ownership limitation caps, which is not an input in a fixed-for-fixed option or forward on equity shares.
As of April 2024, the Company determined that the fair value of the put option was nominal due to the short settlement period of one day or less, and the Company recognized a liability of $
In connection with the Purchase Agreement, the Company issued
During the nine months ended September 30, 2025, the Company sold an aggregate of
18
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
At-Market Offering
In April 2025, the Company executed an ATM Agreement with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, acting as sales agents. The ATM Agreement allows the Company to sell its common stock, from time to time, for gross proceeds of up to $
Registered Direct Offering
In May 2025, the Company entered into securities purchase agreements through which the Company agreed to issue and sell to the Purchasers in a RDO an aggregate of
Common Stock Reserved for Issuance
Upon the Closing of the Business Combination in March 2024, the Company increased its total number of authorized shares to
|
|
September 30, |
|
|
December 31, |
|
||
|
|
2025 |
|
|
2024 |
|
||
Common stock warrants |
|
|
|
|
|
|
||
Legacy GCT Earnout Shares |
|
|
|
|
|
|
||
Shares available for future grant from 2024 plan |
|
|
|
|
|
|
||
Unvested RSUs |
|
|
|
|
|
|
||
Shares available for future grant from 2024 ESPP |
|
|
|
|
|
|
||
Convertible promissory notes |
|
|
|
|
|
|
||
Options issued and outstanding |
|
|
|
|
|
|
||
Vested and unreleased RSUs |
|
|
|
|
|
— |
|
|
Total |
|
|
|
|
|
|
||
9. Common Stock Warrants
Investor Warrants
During the three months ended September 30, 2025, the Company issued
19
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
The following table represents a summary of warrants to purchase shares of the Company’s common stock that are outstanding (in thousands, except for exercise price):
Issue Date |
|
September 30, 2025 |
|
|
Exercise Price |
|
Expiration |
|
February 2023 - June 2023 |
|
|
|
|
$ |
|
February 2026 – June 2026 |
|
July 2023 |
|
|
|
|
$ |
|
July 2026 |
|
October 2023 |
|
|
|
|
$ |
|
October 2026 |
|
Private and public warrants |
|
|
|
|
$ |
|
March 2029 |
|
September 2024 |
|
|
|
|
$ |
|
September 2029 |
|
May 2025 |
|
|
|
|
$ |
|
November 2030 |
|
August 2025 |
|
|
|
|
$ |
|
August 2030 |
|
September 2025 |
|
|
|
|
$ |
|
September 2030 |
|
Total |
|
|
|
|
|
|
|
|
10. Stock-Based Compensation
2024 Employee Stock Purchase Plan
In December 2023, the Company’s board of directors adopted the 2024 Employee Stock Purchase Plan, which was subsequently approved by the Company’s stockholders in February 2024 (the “2024 ESPP”), under which eligible employees may be provided with the opportunity to periodically purchase shares of the Company’s common stock at a discount through their accumulated periodic payroll deductions. As of September 30, 2025, the Company had
2024 Incentive Compensation Plan
In March 2024, the Company adopted the 2024 Omnibus Incentive Compensation Plan (the “2024 Plan”). The 2024 Plan permits the grant of stock options, stock appreciation rights, stock awards, restricted stock units (“RSUs”), dividend equivalent rights, cash awards, and other awards to employees and non-employees, including members of the board of directors, consultants, or advisors. As of September 30, 2025, the Company had
Stock options outstanding under the 2024 Plan were as follows (in thousands, except per share amounts and years):
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Balance as of December 31, 2024 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercised |
|
|
( |
) |
|
$ |
|
|
|
|
|
|
|
|||
Balance as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Exercisable as of September 30, 2025 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Restricted Stock Units
In June 2024, the Company granted to the members of its board of directors certain share-based awards with a fixed monetary amount of $
20
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
remaining
In August 2024, the Company granted various employees
In December 2024, the Company granted various employees
In May 2025, the Company granted to the members of its board of directors certain share-based awards with a fixed monetary amount of $
In September 2025, the Company also granted to its officers
RSUs under the 2024 Plan were as follows (in thousands, except per share amounts):
|
|
Number of RSUs |
|
|
Weighted |
|
||
Balance as of December 31, 2024 |
|
|
|
|
$ |
|
||
Granted |
|
|
|
|
$ |
|
||
Vested and released |
|
|
( |
) |
|
$ |
|
|
Cancelled |
|
|
( |
) |
|
$ |
|
|
Balance as of September 30, 2025 |
|
|
|
|
$ |
|
||
Vested and unreleased as of September 30, 2025 |
|
|
|
|
$ |
|
||
During the three and nine months ended September 30, 2025 the Company recognized stock-based compensation of $
Stock-Based Compensation
The following table summarizes stock-based compensation included in the Company’s unaudited condensed consolidated statements of operations (in thousands):
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
Cost of revenues |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
21
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
11. Income Taxes
For financial reporting purposes, the Company’s effective tax rate used for the interim periods is based on the estimated full-year income tax rate. For the three and nine months ended September 30, 2025, the Company’s effective tax rate differs from the statutory rate primarily due to the valuation allowance recorded against the net deferred tax asset balance.
For the nine months ended September 30, 2025 and 2024, the Company recorded income tax expense of $
As of September 30, 2025 the Company had unrecognized tax benefits of $
A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome. The Company adjusts these reserves, as well as the related interest, considering changing facts and circumstances.
One Big Beautiful Bill Act
In July 2025, the One Big Beautiful Bill Act was enacted in the United States, which includes significant changes to federal tax law and other regulatory provisions that may impact the Company. The Company is currently evaluating the potential impact of the new legislation, including implications for deferred taxes and related disclosures.
12. Employee Benefit Plans
Under Korean law, the Company is required to make severance payments to Korean employees leaving their employment. The Company’s severance pay liability to its Korean employees, which is a function of the employee’s salary, years of employment, and severance factor, is reflected in the accompanying unaudited condensed consolidated balance sheets as the net defined benefit liabilities on an accrual basis.
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
Liability for severance payments, gross |
|
$ |
|
|
$ |
|
||
Plan assets |
|
|
( |
) |
|
|
( |
) |
Liability for severance payments, net |
|
$ |
|
|
$ |
|
||
13. Related Party Transactions
A summary of balances and transactions with the related parties who are stockholders of the Company were as follows (in thousands):
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
Anapass |
|
|
Kyeongho Lee |
|
|
Anapass |
|
|
Kyeongho Lee |
|
||||
Borrowings |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Other current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
For the three and nine months ended September 30, 2025, the Company recorded $
22
Table of Contents
GCT SEMICONDUCTOR HOLDING, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
14. Entity-Wide Information
Long-lived assets by geographic region were as follows (in thousands):
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
South Korea |
|
$ |
|
|
$ |
|
||
United States |
|
|
|
|
|
|
||
Total |
|
$ |
|
|
$ |
|
||
15. Net Loss Per Share
The following outstanding potentially dilutive common stock equivalents were excluded from the computation of diluted net loss per share for the periods indicated because including them would have been anti-dilutive (in thousands):
|
|
September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Common stock warrants |
|
|
|
|
|
|
||
Legacy GCT Earnout Shares |
|
|
|
|
|
|
||
Unvested RSUs |
|
|
|
|
|
|
||
Sponsor Earnout Shares |
|
|
|
|
|
|
||
Convertible promissory notes |
|
|
|
|
|
|
||
Options issued and outstanding |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Vested and unreleased RSUs are included in calculating basic and diluted net loss per share even though they are not physically settled in shares of the Company’s common stock.
16. Subsequent Events
Repayment of Borrowings
In October 2025, the Company paid in full two term loans with Kyeongho Lee, totaling $
Anapass, Inc., Related Party
In November 2025, the Company executed an amendment with Anapass, Inc., to extend the maturity date from
Mujin Electronics Co., Ltd.
In October 2025, the Company executed an amendment with Mujin Electronics Co., Ltd. to extend the maturity date from
Investor Warrants
In November 2025, the Company issued
23
Table of Contents
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This discussion and analysis of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025 and related notes appearing elsewhere in this quarterly report on Form 10-Q (“Quarterly Report”) and our audited consolidated financial statements as of and for the years ended December 31, 2024 and 2023 and related notes included in our Form 10‑K filing with the Securities and Exchange Commission (“SEC”) on March 25, 2025.
This discussion may contain forward-looking statements including, but not limited to, our expectations or predictions of future financial or business performance or conditions. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. You should read the sections in this Quarterly Report titled “Risk Factors” and “Special Note of Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements. Unless otherwise indicated, the terms “GCT,” “the Company,” “we,” “us,” or “our” refer to GCT Semiconductor Holding Inc., a Delaware corporation, together with our consolidated subsidiaries.
Overview
We are a fabless semiconductor company that specializes in the design, manufacturing, and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers (“RF”) and modems, which are essential for a wide variety of industrial, business-to-business (“B2B”) and consumer applications. We have successfully developed and supplied communication semiconductor chipsets and modules to leading wireless operators worldwide, as well as to original design manufacturers (“ODMs”) and original equipment manufacturers (“OEMs”) for portable wireless routers (e.g., Mobile Router (“MiFi”)), indoor and outdoor fixed wireless routers (e.g., customer premise equipment (“CPE”)), industrial machine-to-machine (“M2M”) applications and smartphones.
We oversee sales, marketing, and accounting operations from our headquarters in San Jose, California. The Company conducts product design, development, and customer support through our wholly owned subsidiaries located in South Korea, one of which serves as our research and development center. In addition, we utilize separate sales offices for local technical support and sales in Taiwan, China, and Japan.
Our current product portfolio includes RF and modem chipsets based on 4th generation (“4G”), known as Long Term Evolution (“LTE”), technology offering a variety of chipsets differentiated by speed and functionality. These include 4G LTE, 4.5G LTE Advanced (twice the speed of LTE), and 4.75G LTE Advanced-Pro (four times the speed of LTE) chipsets. The Company also develops and sells cellular Internet of Things (“IoT”) chipsets for low-speed mobile networks such as eMTC/NB-IOT/Sigfox, and other network protocols.
Even as more and more applications are deployed on 5G networks, we nonetheless anticipate continued demand for our existing 4G LTE product lineup (4.75G/4.5G/4G, etc.) for the foreseeable future, because 4G products are expected to coexist in the market with 5G products at lower price points for some time in the same way that 3rd generation (“3G”) products coexisted with 4G products when 4G networks were first deployed. Having delivered initial samples to our lead 5G customers in the second quarter of 2025, we are focusing on production readiness now and anticipate first production shipments of our 5G products starting late in the fourth quarter of 2025 or early in the first quarter of 2026. Also, we expect the average sales prices for our 5G chipset to be approximately four times that of our 4G chipset, resulting in a significant increase in revenue and gross margins. We plan to continuously expand our product lineup to support 5G chipsets for future applications such as vehicle-to-everything standard (e.g., C-V2X), 5G-based satellite communication (e.g., Non-Terrestrial Network), and 5G-based IoT standard (e.g., RedCap). Our current chipset products are used in a wide variety of applications, including fixed wireless subscriber terminals (e.g., CPE), mobile wireless routers (e.g., Mobile Router/MiFi), various communication modules and devices, and industrial products.
Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, and the issuance of capital stock.
Key Factors Affecting Our Performance
We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business but also pose risks and challenges, including those in the section titled “Risk Factors” of this Quarterly Report.
24
Table of Contents
Commercial Deployment of 4G LTE and 5G Market
Our business depends upon the continued commercial deployment of 4G and 5G wireless communications equipment, products, and services based on GCT’s technology. Deployment of new networks by wireless carriers requires significant capital expenditures well in advance of any revenue from such networks. If the rate of deployment of new networks by wireless carriers is slower than our expectation, this will reduce the sales of its products and could cause OEMs and ODMs to hold excess inventory. This would harm our revenues and our financial results. The worldwide commercial deployment and adoption of the narrow band LTE variants, Cat M and Cat NB, are expected to further expand the markets for IoT devices. If deployments of the Cat M or Cat NB standards are delayed or if competing standards for IoT devices become favored by wireless carriers, we may not be able to successfully increase sales of our Cat M and Cat NB products, which would harm our revenues and financial results.
Development of New Products
The markets in which we and our customers compete or plan to compete are characterized by rapidly changing technologies, industry standards, and technological obsolescence. Our ability to compete successfully depends on our ability to design, develop, market, and support new products and enhancements on a timely and cost-effective basis. A fundamental shift in technologies in any of our target markets, such as the 5G wireless communications markets, could harm our competitive position within these markets. Our failure to anticipate these shifts, develop new technologies, or react to changes in existing technologies could delay our development of new products, which could result in product obsolescence, decreased revenue, and loss of design wins.
The success of our new products will depend on accurate forecasts of long-term market demand, customer and consumer requirements, and future technological developments, as well as a variety of specific implementation factors, including:
If we fail to introduce new products that meet the demands of our customers or our target markets, or if we fail to penetrate new markets, our revenue will likely decrease over time, and our financial condition could suffer.
Semiconductor and Communications Industry
The semiconductor industry has historically exhibited a pattern of cyclicality, which at various times has included significant downturns in customer demand. Cyclical downturns can result in substantial declines in semiconductor demand, production overcapacity, high inventory levels, and accelerated erosion of average selling prices. Such downturns result from a variety of market forces, including constant and rapid technological change, quick product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.
Downturns in the semiconductor industry have been attributed to a variety of factors, including the COVID‑19 pandemic, ongoing trade disputes between the United States and China, weakness in demand and pricing for semiconductors across applications, and excess inventory. More recently, the announcement and implementation of tariffs and other trade policies by the United States and other countries have resulted in a significant degree of uncertainty and risks in the global economic condition, which may negatively impact the semiconductor industry and the markets in which we operate. These downturns have directly impacted GCT’s business, suppliers, distributors, and end customers.
Because a significant portion of our expenses are fixed in the near term or are incurred in advance of anticipated sales, we may not be able to reduce our expenses rapidly enough to offset any unanticipated shortfall in revenue. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In addition, the semiconductor industry has periodically experienced increased demand and production constraints. As a fabless semiconductor company, we rely exclusively on third-party foundries, including certain major semiconductor foundries such as United Microelectronics Corporation, Samsung and Taiwan
25
Table of Contents
Semiconductor Manufacturing Corporation, for the manufacturing and supplies of its wafers and products. We do not have any formal foundry agreements that guarantee a minimum level of manufacturing capacity. In times of significant increasing demand for capacity, these foundries may experience production shortages and may not allocate sufficient manufacturing capacity to us. If this happens, we may not be able to produce sufficient quantities of our products to meet the increased demand. Any disruption in our supply chain can make it more difficult for us to obtain sufficient wafer, assembly, and test resources from our subcontract manufacturers. Any factor adversely affecting the semiconductor industry in general, or the particular segments of the industry that our products target, may adversely affect our ability to generate revenue and impact our operating results.
In addition, a shortage of manufacturing capacity can also impact the product development strategies of our major customers, which may, in turn, affect our business operations. For example, in 2022, the supply shortage caused our largest customer to change its priority on product development from 4G to the next generation of 5G products, which resulted in the reduction of 4G activity and a decline in demand for our products. Our business is expected to increase again with this customer after the launch of our 5G products.
In the past, the wireless communications industry has experienced pronounced downturns, and these cycles may continue in the future. A future decline in global economic conditions could have adverse, wide-ranging effects on demand for our products and for the products of our customers, particularly wireless communications equipment manufacturers or other members of the wireless industry, such as wireless network operators. Inflation, deflation, and economic recessions that adversely affect the global economy and capital markets also adversely affect our customers and our end consumers. For example, our customers’ ability to purchase or pay for our products and services, obtain financing, and upgrade wireless networks could be adversely affected, which may lead to many networking equipment providers slowing their research and development activities, canceling, or delaying new product development, reducing their inventories, and taking a cautious approach to acquiring our products, which would have a significant negative impact on our business. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In the future, any of these trends may also cause our operating results to fluctuate significantly from year to year, which may increase the volatility of our stock price.
Key Components of Results of Operations
Net Revenues
The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Our net revenues are comprised of product and service revenues.
Product Revenues
Our product sales are generated from the sale of mobile semiconductor products. Product revenues are recognized at a point in time once control has been transferred to a customer, which is generally at the time of shipment.
Service Revenues
Our service revenues are generated from the sale of mobile semiconductor platform solutions aimed at the 4G LTE and 5G industries, development services, technical advice, and maintenance services. Service revenues are generally recognized over time as the customer obtains control of the promised services.
Cost of Net Revenues
Our cost of net revenues consists of product and service costs. The cost of product net revenues consists of direct and indirect costs related to the manufacturing of our products. Direct costs include wafer costs and costs of assembly and testing performed by third-party contract manufacturers. Indirect costs consist of provisions for excess, slow moving and obsolete inventory, royalties, allocated overhead for employee costs and facility costs, warranty, and the amortization of our production mask sets and certain intangible assets. Shipping and handling costs incurred for inventory purchases related to the units sold and costs of product shipments are also recorded in the cost of net product revenues. Service costs consist of non-recurring engineering costs for service projects.
Operating Expenses
Research and Development Expenses
Our research and development (“R&D”) expenses consist of costs incurred to develop our products and services. These expenses consist of personnel costs, including salaries, employee benefit costs, and stock-based compensation for employees engaged in R&D activities, software costs, computing costs, hardware and experimental supplies, and expenses for outside engineering consultants. We expense all R&D costs in the periods in which they are incurred.
26
Table of Contents
Sales and Marketing Expenses
Our sales and marketing (“S&M”) expenses consist of employee-related expenses, including salaries, commissions, employee benefits costs, and stock-based compensation for all marketing, sales, and sales support employees. S&M expenses also include local and centralized advertising costs and the infrastructure required to support our marketing efforts. We expense S&M costs in the periods in which they are incurred.
General and Administrative Expenses
Our general and administrative (“G&A”) expenses consist of various components not related to R&D or S&M, such as personnel costs, regulatory fees, costs associated with maintaining and filing intellectual property, meals and entertainment expenses, travel expenses, insurance expenses, and other expenditures related to external professional services including legal, engineering, marketing, human resources, audit, and accounting services. Personnel costs include salaries, benefits, and stock-based compensation. As we continue to grow and expand our workforce and operations, and considering the increased costs associated with operating as a public company, we anticipate that our G&A expenses will increase for the foreseeable future.
Gain on Extinguishment of Liability
Gain on extinguishment of liability relates to the release by a vendor due to a contract termination during the period of amounts payable by us for R&D services received in prior years.
Other Income (Expense)
Interest Expense
Interest expense primarily consists of interest and amortization of related debt issuance costs related to our borrowings and convertible promissory notes.
Gain on foreign currency transactions, net
Gain on foreign currency transactions consists of gains, presented net of losses, from transactions denominated in other currencies, primarily South Korean won.
Change in fair value of common stock forward liability
Common stock forward liability represents a freestanding common stock forward contract under the purchase agreement (“Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”) executed in April 2024, which contains a variable share forward on our common stock. This freestanding instrument is precluded from equity classification since the Purchase Agreement with B. Riley requires shareholder approval for the issuance of shares in excess of the applicable ownership limitation caps, which is not an input in a fixed-for-fixed option or forward on equity shares. The fair value of this liability reflects the probability-adjusted present value of the discount to be provided to B. Riley for sales of our common stock under the Purchase Agreement, relative to the volume-weighted average price of our common stock during the applicable pricing period. Change in fair value of common stock forward liability includes measurement gains and losses driven by the change in the probability of scenarios to sell certain number of shares under the Purchase Agreement.
Change in fair value of common stock warrant liabilities
Common stock warrants are classified as liabilities if they do not meet equity classification requirements based on their settlement mechanism upon a change of control and similar transactions. The corresponding liability is remeasured at fair value while the common stock warrants remain outstanding.
Change in fair value of convertible promissory notes
Change in fair value of convertible promissory notes includes measurement gains and losses related to the outstanding convertible promissory notes that are accounted for under the fair value option.
Results of Operations
This section discusses the results of our operations for the periods indicated. The period-to-period comparison of financial results is not necessarily indicative of future results.
27
Table of Contents
For the Three Months Ended September 30, 2025 and 2024
The following table sets forth our historical results for the periods indicated and the changes between periods (in thousands):
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
$ change |
|
|
% change |
|
||||
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
148 |
|
|
$ |
1,715 |
|
|
$ |
(1,567 |
) |
|
|
(91 |
)% |
Service |
|
|
282 |
|
|
|
895 |
|
|
|
(613 |
) |
|
|
(68 |
)% |
Total net revenues |
|
|
430 |
|
|
|
2,610 |
|
|
|
(2,180 |
) |
|
|
(84 |
)% |
Cost of net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
1,419 |
|
|
|
710 |
|
|
|
709 |
|
|
|
100 |
% |
Service |
|
|
61 |
|
|
|
274 |
|
|
|
(213 |
) |
|
|
(78 |
)% |
Total cost of net revenues |
|
|
1,480 |
|
|
|
984 |
|
|
|
496 |
|
|
|
50 |
% |
Gross profit (loss) |
|
|
(1,050 |
) |
|
|
1,626 |
|
|
|
(2,676 |
) |
|
|
(165 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
3,258 |
|
|
|
4,210 |
|
|
|
(952 |
) |
|
|
(23 |
)% |
Sales and marketing |
|
|
1,048 |
|
|
|
949 |
|
|
|
99 |
|
|
|
10 |
% |
General and administrative |
|
|
3,898 |
|
|
|
2,379 |
|
|
|
1,519 |
|
|
|
64 |
% |
Total operating expenses |
|
|
8,204 |
|
|
|
7,538 |
|
|
|
666 |
|
|
|
9 |
% |
Loss from operations |
|
|
(9,254 |
) |
|
|
(5,912 |
) |
|
|
(3,342 |
) |
|
|
57 |
% |
Interest expense |
|
|
(1,783 |
) |
|
|
(667 |
) |
|
|
(1,116 |
) |
|
|
167 |
% |
Gain (loss) on foreign currency transactions, net |
|
|
1,320 |
|
|
|
(1,044 |
) |
|
|
2,364 |
|
|
|
(226 |
)% |
Change in fair value of common stock forward liability |
|
|
16 |
|
|
|
— |
|
|
|
16 |
|
|
|
100 |
% |
Change in fair value of common stock warrant liabilities |
|
|
(3,812 |
) |
|
|
759 |
|
|
|
(4,571 |
) |
|
|
(602 |
)% |
Change in fair value of convertible promissory notes |
|
|
(164 |
) |
|
|
(165 |
) |
|
|
1 |
|
|
|
(1 |
)% |
Other income (expenses), net |
|
|
6 |
|
|
|
(31 |
) |
|
|
37 |
|
|
|
(119 |
)% |
Loss before provision for income taxes |
|
|
(13,671 |
) |
|
|
(7,060 |
) |
|
|
(6,611 |
) |
|
|
94 |
% |
Provision for income taxes |
|
|
178 |
|
|
|
61 |
|
|
|
117 |
|
|
|
192 |
% |
Net loss |
|
$ |
(13,849 |
) |
|
$ |
(7,121 |
) |
|
$ |
(6,728 |
) |
|
|
94 |
% |
Net Revenues
Net revenues decreased by $2.2 million, or 84%, from $2.6 million for the three months ended September 30, 2024 to $0.4 million for the three months ended September 30, 2025. The reduction was attributable to a decrease of $1.6 million in product sales and $0.6 million in service revenue.
Product sales decreased by $1.6 million, or 91%, from $1.7 million for the three months ended September 30, 2024 to $0.1 million for the three months ended September 30, 2025. The sales of our LTE platforms contributed $1.5 million to our product sales in the three months ended September 30, 2024, and there were no LTE platform sales during the three months ended September 30, 2025. In addition, the sales of our LTE products decreased by $0.1 million due to our largest customers changing their priorities on product development from 4G to 5G products.
Service revenues decreased by $0.6 million, or 68%, from $0.9 million for the three months ended September 30, 2024 to $0.3 million for the three months ended September 30, 2025. The decrease was attributed to the substantial completion of a significant service project in the second quarter of 2024, which then did not contribute materially in subsequent quarters. Our service project portfolio and related revenue during the third quarter of 2025 was less extensive.
Cost of Net Revenues
Cost of net revenues increased by $0.5 million, or 50%, from $1.0 million for the three months ended September 30, 2024 to $1.5 million for the three months ended September 30, 2025.
28
Table of Contents
Product costs increased by $0.7 million, or 100%, from $0.7 million for the three months ended September 30, 2024 to $1.4 million for the three months ended September 30, 2025. This increase in product costs was primarily driven by additional production overhead costs of $0.4 million and an additional $0.5 million write down related to slow moving and obsolete LTE inventory.
Service costs decreased by $0.2 million, or 78%, from $0.3 million for the three months ended September 30, 2024 to $0.1 million for the three months ended September 30, 2025. This decrease in service costs was commensurate with the level of our service project activity.
Our gross margin for the three months ended September 30, 2024 was 62%. Our current gross margin for the three months ended September 30, 2025 is negative and not meaningful, as we continue experiencing lower product revenue, which is currently not sufficient to fully absorb production overhead costs. This makes our current gross margins less indicative of the underlying profitability of our products and services. We expect operational efficiencies to improve as revenues increase, after 5G product sales start contributing more significantly to our overall revenue beginning in the first quarter of 2026.
Research and Development Expenses
Research and development expenses decreased by $1.0 million, or 23%, from $4.2 million for the three months ended September 30, 2024 to $3.3 million for the three months ended September 30, 2025. This decrease was primarily due to a $1.2 million reduction in professional services provided by Alpha related to the design of 5G chip products as this development project was completed in the second quarter of 2025, partially offset by a $0.2 million increase in personnel-related costs.
Sales and Marketing Expenses
Sales and marketing expenses remained consistent at $1.0 million and $0.9 million during the three months ended September 30, 2025 and 2024, respectively.
General and Administrative Expenses
General and administrative expenses increased by $1.5 million, or 64%, from $2.4 million for the three months ended September 30, 2024 to $3.9 million for the three months ended September 30, 2025. This increase was primarily driven by a $1.2 million increase in the stock-based compensation expense due to the issuance of the equity-classified common stock warrants to certain investors. This increase was also driven by a $0.2 million increase in personnel-related costs.
Interest Expense
Interest expense increased by $1.1 million, or 167%, from $0.7 million for the three months ended September 30, 2024 to $1.8 million for the three months ended September 30, 2025. This increase was primarily due to interest and penalties we incurred on outstanding term loan balances.
Gain (loss) on foreign currency transactions, net
Foreign currency transactions resulted in a gain of $1.3 million for the three months ended September 30, 2025 and a loss of $1.0 million for the three months ended September 30, 2024. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. The gain in the third quarter of fiscal 2025 was driven by the appreciation of the U.S. dollar against the South Korean won, while the loss in the third quarter of fiscal 2024 was attributable to the depreciation of the U.S. dollar against the South Korean won.
Change in fair value of common stock warrant liabilities
The change in fair value of common stock warrant liabilities resulted in a loss of $3.8 million for the three months ended September 30, 2025 and a gain of $0.8 million for the three months ended September 30, 2024. The loss in the third quarter of fiscal 2025 was driven by changes in the volatility implied by the traded price of our warrants as of the valuation date, which was used to determine the fair value of our common stock warrant liability. The gain in the third quarter of fiscal 2024 was primarily driven by changes in the fair value of our common stock during the three months ended September 30, 2024.
29
Table of Contents
For the Nine Months Ended September 30, 2025 and 2024
The following table sets forth our historical results for the periods indicated and the changes between periods (in thousands):
|
|
Nine Months Ended September 30, |
|
|
|
|
|
|
|
|||||||
|
|
2025 |
|
|
2024 |
|
|
$ change |
|
|
% change |
|
||||
Net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
$ |
647 |
|
|
$ |
4,111 |
|
|
$ |
(3,464 |
) |
|
|
(84 |
)% |
Service |
|
|
1,461 |
|
|
|
3,232 |
|
|
|
(1,771 |
) |
|
|
(55 |
)% |
Total net revenues |
|
|
2,108 |
|
|
|
7,343 |
|
|
|
(5,235 |
) |
|
|
(71 |
)% |
Cost of net revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Product |
|
|
2,208 |
|
|
|
1,522 |
|
|
|
686 |
|
|
|
45 |
% |
Service |
|
|
484 |
|
|
|
1,321 |
|
|
|
(837 |
) |
|
|
(63 |
)% |
Total cost of net revenues |
|
|
2,692 |
|
|
|
2,843 |
|
|
|
(151 |
) |
|
|
(5 |
)% |
Gross profit (loss) |
|
|
(584 |
) |
|
|
4,500 |
|
|
|
(5,084 |
) |
|
|
(113 |
)% |
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
10,868 |
|
|
|
13,895 |
|
|
|
(3,027 |
) |
|
|
(22 |
)% |
Sales and marketing |
|
|
3,187 |
|
|
|
2,921 |
|
|
|
266 |
|
|
|
9 |
% |
General and administrative |
|
|
9,947 |
|
|
|
8,075 |
|
|
|
1,872 |
|
|
|
23 |
% |
Gain on extinguishment of liability |
|
|
— |
|
|
|
(14,636 |
) |
|
|
14,636 |
|
|
|
(100 |
)% |
Total operating expenses |
|
|
24,002 |
|
|
|
10,255 |
|
|
|
13,747 |
|
|
|
134 |
% |
Loss from operations |
|
|
(24,586 |
) |
|
|
(5,755 |
) |
|
|
(18,831 |
) |
|
|
327 |
% |
Interest expense |
|
|
(4,385 |
) |
|
|
(3,509 |
) |
|
|
(876 |
) |
|
|
25 |
% |
Gain (loss) on foreign currency transactions, net |
|
|
(1,876 |
) |
|
|
1,244 |
|
|
|
(3,120 |
) |
|
|
(251 |
)% |
Change in fair value of common stock forward liability |
|
|
311 |
|
|
|
(586 |
) |
|
|
897 |
|
|
|
(153 |
)% |
Change in fair value of common stock warrant liabilities |
|
|
(3,173 |
) |
|
|
2,761 |
|
|
|
(5,934 |
) |
|
|
(215 |
)% |
Change in fair value of convertible promissory notes |
|
|
(340 |
) |
|
|
(1,354 |
) |
|
|
1,014 |
|
|
|
(75 |
)% |
Other income, net |
|
|
16 |
|
|
|
(21 |
) |
|
|
37 |
|
|
|
(176 |
)% |
Loss before provision for income taxes |
|
|
(34,033 |
) |
|
|
(7,220 |
) |
|
|
(26,813 |
) |
|
|
371 |
% |
Provision for income taxes |
|
|
322 |
|
|
|
187 |
|
|
|
135 |
|
|
|
72 |
% |
Net loss |
|
$ |
(34,355 |
) |
|
$ |
(7,407 |
) |
|
$ |
(26,948 |
) |
|
|
364 |
% |
Net Revenues
Net revenues decreased by $5.2 million, or 71%, from $7.3 million for the nine months ended September 30, 2024 to $2.1 million for the nine months ended September 30, 2025. The reduction was primarily attributable to a decrease of $3.5 million in product sales and a decrease of $1.8 million in service revenues.
Product sales decreased by $3.5 million, or 84%, from $4.1 million for the nine months ended September 30, 2024 to $0.6 million for the nine months ended September 30, 2025. The sales of our LTE platforms contributed $3.8 million to our product sales in the first three quarters of 2024, and there were no LTE platform sales during the first three quarters of 2025.
Service revenues decreased by $1.8 million, or 55%, from $3.2 million for the nine months ended September 30, 2024 to $1.5 million for the nine months ended September 30, 2025. The decrease was attributed to the substantial completion of a significant service project during the nine months ended September 30, 2024, which then did not contribute materially in subsequent quarters. Our service project portfolio during the nine months ended September 30, 2025 was less extensive resulting in lower service revenues.
Cost of Net Revenues
Cost of net revenues decreased by $0.2 million, or 5%, from $2.8 million for the nine months ended September 30, 2024 to $2.7 million for the nine months ended September 30, 2025.
Product costs increased by $0.7 million, or 45%, from $1.5 million for the nine months ended September 30, 2024 to $2.2 million for the nine months ended September 30, 2025. This increase was primarily driven by additional production overhead costs of $0.4 million and an additional $0.3 million write down for slow moving and obsolete LTE inventory.
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Service costs decreased by $0.8 million, or 63%, from $1.3 million for the nine months ended September 30, 2024 to $0.5 million for the nine months ended September 30, 2025. This decrease in service costs was commensurate with the level of our service project activity.
Our gross margin for the nine months ended September 30, 2024 was 61%. Our gross margin for the nine months ended September 30, 2025 is negative and not meaningful, as we continue experiencing lower product revenue, which is currently not sufficient to fully absorb production overhead costs. This makes our current gross margins less indicative of the underlying profitability of our products and services. We expect operational efficiencies to improve as revenues increase, which will begin after 5G product sales start contributing more significantly to our overall revenue beginning in the first quarter of 2026.
Research and Development Expenses
Research and development expenses decreased by $3.0 million, or 22%, from $13.9 million for the nine months ended September 30, 2024 to $10.9 million for the nine months ended September 30, 2025. This decrease was primarily due to a $2.7 million reduction in professional services provided by Alpha related to the design of 5G chip products after completion of this development project in the second quarter of 2025, and a $1.5 million reduction in the project-specific intellectual property expenses incurred in 2024. This reduction was partially offset by a $0.7 million increase in personnel-related costs due to changes in our headcount and a $0.2 million increase in pre-production supplies for 5G chips related to our key business initiatives.
Sales and Marketing Expenses
Sales and marketing expenses remained relatively consistent at $3.2 million and $2.9 million for the nine months ended September 30, 2025 and 2024, respectively.
General and Administrative Expenses
General and administrative expenses increased by $1.9 million, or 23%, from $8.1 million for the nine months ended September 30, 2024 to $9.9 million for the nine months ended September 30, 2025. Changes in our expected credit loss estimates for receivables resulted in a $0.5 million gain in the nine months ended September 30, 2024, compared to a $1.4 million loss in the nine months ended September 30, 2025, resulting in a $1.9 million net increase to general and administrative expenses. Stock-based compensation expense increased by $0.6 million from $1.6 million in the nine months ended September 30, 2024 compared to $2.1 million for the nine months ended September 30, 2025. This increase was primarily due to the issuance of the equity-classified common stock warrants to certain investors with the fair value of $1.3 million in the third quarter of 2025, compared to $0.9 million of the stock-based compensation related to vesting of performance-based founder shares in the first quarter of 2024. Personnel-related costs increased by $0.3 million in the first three quarters of 2025 due to the increased headcount and merit-based salary adjustments. These increases were partially offset by a $1.0 million decrease in professional services and other costs in the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, driven by lower transactional activity during this period.
Gain on Extinguishment of Liability
Gain on extinguishment of liability was $14.6 million for the nine months ended September 30, 2024 due to the release by a vendor of amounts payable by us for research and development services received in prior years. No similar transactions took place during the nine months ended September 30, 2025.
Interest Expense
Interest expense increased by $0.9 million or 25%, from $3.5 million for the nine months ended September 30, 2024 to $4.4 million for the nine months ended September 30, 2025. This increase was primarily due to the increase in outstanding debt.
Gain (loss) on foreign currency transactions, net
Foreign currency transactions resulted in a loss of $1.9 million for the nine months ended September 30, 2025 and a gain of $1.2 million for the nine months ended September 30, 2024. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. The loss in the nine months ended September 30, 2025 was primarily driven by the depreciation of the U.S. dollar against the South Korean won, while the gain in the nine months ended September 30, 2024 was attributable to the appreciation of the U.S. dollar against the South Korean won.
Change in fair value of common stock forward liability
The change in fair value of common stock forward liability resulted in a gain of $0.3 million for the nine months ended September 30, 2025 and a loss of $0.6 million for the nine months ended September 30, 2024. The decrease in the fair value of the underlying liability
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of $0.3 million for the nine months ended September 30, 2025 was based on our expectations related to the utilization of the available commitment under the common stock purchase agreement with B. Riley. The increase in fair value of common stock forward liability of $0.6 million for the nine months ended September 30, 2024 was due to the initial recognition of this financial instrument based on our assumptions at the inception of this arrangement.
Change in fair value of common stock warrant liabilities
The change in fair value of common stock warrant liabilities resulted in a loss of $3.2 million for the nine months ended September 30, 2025 and a gain of $2.8 million for the nine months ended September 30, 2024. The loss in the first three quarters of 2025 was driven by changes in the volatility implied by the traded price of our warrants as of the valuation date, which was used to determine the fair value of our common stock warrant liability. The gain in the first three quarters of 2024 was driven by changes in the fair value of our common stock during the three months ended September 30, 2024.
Change in fair value of convertible promissory notes
Losses from changes in fair value of convertible promissory notes were less than $0.3 million and $1.4 million for the nine months ended September 30, 2025 and 2024, respectively. These losses in each year were derived from the fair value measurement and related assumptions, specifically remeasurement of the convertible notes prior to their settlement in our common stock, which significantly increased the underlying liability during the nine months ended September 30, 2024.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, the issuance of capital stock, and the exercise of stock options.
With limited exceptions, we have incurred and expect to continue incurring significant operating losses. For the nine months ended September 30, 2025, we had a net loss of $34.4 million. For the years ended December 31, 2024 and 2023, we had a net loss of $12.4 million and $22.5 million, respectively. For the nine months ended September 30, 2025 and 2024, we had cash used in operating activities of $23.5 million and $28.7 million, respectively. As of September 30, 2025, we had an accumulated deficit of $596.4 million. Our unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary if we are unable to obtain adequate financing in the future.
In April 2024, we entered into the Purchase Agreement and a related registration rights agreement (the “Registration Rights Agreement”) with B. Riley for an equity line of credit facility (“ELOC”). Pursuant to the ELOC, we have the right but not the obligation, to sell, from time to time, to B. Riley up to $50.0 million in aggregate gross purchase price of shares of our common stock in our sole discretion, subject to certain conditions and limitations, during the term of 24 months. Through September 30, 2025, we sold an aggregate of 2,438,737 shares of our common stock for $9.9 million under the ELOC and received cash proceeds of $8.7 million, of which $1.0 million was withheld by B. Riley against the outstanding amounts payable.
In April 2025, we executed an at-market issuance sales agreement (“ATM Agreement”) with B. Riley and H.C. Wainwright & Co., LLC, acting as sales agents. The ATM Agreement allows us to sell our common stock for gross proceeds of up to $75.0 million from time to time, through at-the-market offerings or to the sales agents as principal purchasers (“ATM Offering”). As there is no commitment for future sales of additional shares under the ATM Agreement or the ATM Offering, we cannot predict how much, if any, additional proceeds may be realized. During the nine months ended September 30, 2025, we received net proceeds of approximately $1.4 million in cash related to the ATM Offering.
In May 2025, we entered into securities purchase agreements with certain institutional investors to execute a registered direct offering (“RDO”), pursuant to which we sold an aggregate of 7,006,370 shares of our common stock and warrants to purchase up to 10,509,555 shares of common stock at a combined purchase price of $1.57 per share and warrant, for aggregate gross proceeds of approximately $11.0 million. The warrants have an exercise price of $1.71 per share and will be exercisable six months from issuance and will expire five years following such initial date of exercise. The RDO closed on May 16, 2025 and we received net proceeds of $9.9 million in cash.
In November and December 2024, we entered into term loan agreements with Dr. Kyeongho Lee, the chairman of our board of directors, pursuant to which we borrowed $2.9 million and $2.1 million, maturing in December 2024 and January 2025, respectively, which remain outstanding as of September 30, 2025. We incur a penalty of 3% of principal per month on loans from Kyeongho Lee that are past maturity date, calculated daily until principal and accrued interest has been paid.
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In December 2024, we entered into a term loan agreement with Anapass, Inc., our major stockholder, pursuant to which we borrowed $3.4 million maturing in December 2025. In January 2025, we entered into a term loan agreement with Dr. Lee, pursuant to which we borrowed $4.4 million maturing in February 2025, which remained outstanding as of September 30, 2025. In March 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $3.1 million maturing in March 2026. In July 2025, we entered into a term loan agreement with Anapass, Inc. and borrowed $2.1 million that will mature in July 2026. In August 2025, we entered into a term loan agreement with Anapass, Inc. and borrowed $1.4 million that will mature in August 2026. In September 2025, we entered into a term loan agreement with Anapass, Inc. and borrowed $10.7 million that will mature in September 2026. In November 2025, the Company executed an amendment with Anapass, Inc. to extend the maturity date of a term loan, originally entered into in May 2022 with a principal of $2.1 million, from November 2025 to November 2026.
During nine months ended September 30, 2025, we were able to renegotiate the timing of payments for some of the obligations, including loan agreements with i Best Investment Co., Ltd, Dr. Lee, and Anapass, Inc., that initially were due in the first, second, and third fiscal quarter of 2025, respectively. We currently remain dependent on related party debt financing to fund our operations, including the loans received from Anapass Inc. and Dr. Lee.
We expect significant ongoing operating expenditures will be necessary to successfully implement our business plan and market our products. Having delivered initial samples to our lead 5G customers in the second quarter of 2025, we are focusing on production readiness now and anticipate the first production shipments of our 5G products starting late in the fourth quarter of 2025 or early in the first quarter of 2026. We anticipate continued significant related expenditures in the form of production-related costs, including mask sets, wafers, and assembly and test costs, and most such costs will be incurred prior to the commencement of manufacturing and production.
As of September 30, 2025, our existing sources of liquidity include cash and cash equivalents of $8.3 million. As of September 30, 2025, we have outstanding convertible promissory notes and borrowings with a total principal amount of $64.4 million, which are contractually due within 12 months from this Quarterly Report. We will need to start generating positive cash flows, renegotiate our existing debt obligations and raise additional capital through debt or equity financing. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to us or at all.
If we do not have sufficient funds to make such payments, or if we cannot extend the terms of our existing commercial loans or to raise additional capital through equity or debt offerings, the payments can be delayed, which may adversely affect our business operations and financial performance. While we believe that we will be able to secure additional capital and funding in the next 12 months to sustain our operations, there remains a substantial doubt as to our ability to continue as a going concern. For a more detailed description of such risks, please see the section entitled “Risk Factors” disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025.
We intend to mitigate the risk of any working capital deficit by continuing to seek and execute appropriate actions to secure funding as a publicly traded company, including extension and refinancing of existing loans, executing public or private equity offerings, debt financings, and other means. In addition, we recently filed a universal shelf registration statement on Form S-3 that will allow us to raise up to $200.0 million from the issuance of our securities, which includes the $75.0 million for the ATM Offering. Following the completion of the RDO and through the date of this Quarterly Report, the Company has $114.0 million of remaining equity funding capacity available under its shelf registration statement. We have historically been able to raise capital through the issuance and sale of equity and equity-linked instruments, such as redeemable convertible preferred stock, convertible promissory notes, and borrowings, although no assurance can be provided that we would continue to be successful in doing so in the future.
We expect to use additional liquidity and our available cash and cash equivalents to finance the following activities:
While we believe that we have a reasonable basis for our expectation and we will be able to raise additional funds, we cannot provide assurance that we will be able to complete additional financing in a timely manner. In addition, the sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financial covenants that would restrict our operations. We cannot be certain that any financing will be available in the amounts we need or on terms acceptable to us, if at all. Should we enter into definitive collaboration and/or joint venture agreements or engage in business combinations in the future, we may be required to seek additional financing.
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Table of Contents
Cash Flow Comparison for the Nine Months Ended September 30, 2025 and 2024
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
Net cash used in operating activities |
|
$ |
(23,452 |
) |
|
$ |
(28,689 |
) |
Net cash used in investing activities |
|
|
(1,143 |
) |
|
|
(185 |
) |
Net cash provided by financing activities |
|
|
31,066 |
|
|
|
31,596 |
|
Effect of exchange rate changes on cash and cash equivalents |
|
|
437 |
|
|
|
(1,168 |
) |
Net increase in cash and cash equivalents |
|
$ |
6,908 |
|
|
$ |
1,554 |
|
Overview of Cash Flows
During the nine months ended September 30, 2025 and 2024, we funded our operations primarily through financing activities. This included the proceeds received from the reverse recapitalization and concurrent PIPE financing completed in March 2024, as well as through the issuance of convertible promissory notes and term loans, primarily to related parties. We remain dependent on cash inflows from financing activities to fund our operating expenses. The repayment of the outstanding borrowings portfolio will require a combination of cash generated from future operations, additional financing activities, and renegotiation of maturity dates. We are continuously evaluating our capital structure and cash flow projections as we work towards meeting our debt obligations and other liabilities.
Operating Activities
Cash used in operating activities of $23.5 million during the nine months ended September 30, 2025, was primarily attributable to our net loss of $34.4 million, partially offset by non-cash adjustments of $8.5 million and a net change in our operating assets and liabilities of $2.4 million. Non-cash adjustments consisted primarily of a $3.2 million loss from the change in fair value of warrant liabilities, $2.9 million in stock-based compensation, a $1.4 million increase in provision for credit losses, $0.5 million in amortization of operating lease right-of-use assets, $0.5 million in depreciation and amortization charges, and a $0.3 million loss from the change in fair value of convertible promissory notes, partially offset by a $0.3 million gain from the change in fair value of common stock forward liability. The change in our operating assets and liabilities of $2.4 million primarily resulted from a decrease of $1.1 million in inventory primarily due to inventory write downs, an increase of $1.2 million in accrued and other current liabilities, an increase of $1.0 million in net defined benefit liabilities, a decrease of $0.7 million in accounts receivable, a decrease of $0.4 million in prepaid expenses and other current assets, and a $0.1 million decrease in other assets, partially offset by a decrease of $0.8 million in lease liabilities, an increase of $0.5 million in contract assets, a decrease of $0.4 million in income taxes payables, and a decrease of $0.2 million in other liabilities.
Cash used in operating activities of $28.7 million during the nine months ended September 30, 2024, was primarily attributable to our net loss of $7.4 million, non-cash adjustments of $12.2 million, and a net change in our operating assets and liabilities of $9.1 million. Non-cash adjustments consisted primarily of a $14.6 million gain from the extinguishment of a liability, $2.8 million gain from the change in fair value of warrant liabilities, and $0.5 million in provision for credit losses, partially offset by $2.1 million in stock-based compensation, $1.4 million loss from the change in fair value of convertible promissory notes, $0.7 million in non-cash expense related to the issuance of common stock to the underwriter, $0.6 million loss from the initial recognition of the common stock forward liability, $0.5 million in depreciation and amortization charges and $0.5 million in operating lease right-of-use amortization. The change in our operating assets and liabilities of $9.1 million primarily resulted from a decrease of $3.0 million in our accrued and other current liabilities, a decrease of $2.3 million in accounts payable, an increase of $1.7 million in contract assets due to unbilled services provided under certain projects, an increase of $1.6 million in inventory due to lower sales, an increase of $0.9 million in accounts receivable primarily due to slower collections from certain customers, a decrease of $0.5 million in our lease liabilities, and a decrease of $0.3 million in other liabilities, partially offset by an increase of $0.7 million in net defined benefit liabilities and an increase of $0.5 million in contract liabilities.
Investing Activities
Cash used in investing activities during the nine months ended September 30, 2025 and 2024 was related solely to the purchases of property and equipment.
Financing Activities
Cash provided by financing activities of $31.1 million during the nine months ended September 30, 2025, consisted of $21.8 million in proceeds from borrowings, $11.0 million gross proceeds received from the issuance of common stock in a registered direct offering,
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Table of Contents
and $1.5 million in proceeds from the issuance of common stock under the at-market agreement, partially offset by a $2.2 million repayment of our bank borrowings and a $1.2 million payment of common stock issuance costs.
Cash provided by financing activities of $31.6 million during the nine months ended September 30, 2024, consisted of $17.2 million from proceeds received from the reverse recapitalization and PIPE Financing, net of transaction costs, $16.3 million in proceeds from the issuance of convertible promissory notes, and $7.8 million proceeds received from the issuance of common stock to B. Riley under the Purchase Agreement, $3.7 million in proceeds from bank borrowings, and $2.2 million in proceeds from the issuance of common stock and common stock warrants in a private placement, partially offset by $14.1 million repayment of our bank borrowings and $1.6 million repayment of convertible promissory notes.
Commitments and Contractual Obligations
We have material commitments and contractual obligations, including leases, purchase commitments, and research and development agreements. We have various operating leases, under which we lease office equipment and office space. The operating leases have various expiration dates through 2028.
We have certain commitments for outstanding purchase orders related to the manufacture of certain wafers utilized by the Company and other services, and we have entered into a material research and development agreement. See Note 7 to our unaudited condensed consolidated financial statements included in this Form 10-Q for more information regarding our additional commitments and contractual obligations.
We have certain debt agreements in place related to convertible promissory notes and borrowings. See Note 6 to our unaudited condensed consolidated financial statements included in this Form 10-Q for more information regarding our debt arrangements.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We base our estimates on historical experience and various other factors that we believe to be reasonable under the circumstances, which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions due to the inherent uncertainty involved in making those estimates, and any such differences may be material.
There have been no material changes to our critical accounting estimates from those described in “Management’s Discussion and Analysis of Financial Condition,” “Results of Operations – Critical Accounting Policies and Significant Judgments and Estimates” disclosed in our Form 10-K filing with the SEC on March 25, 2025, except that from the Closing we have certain contracts in our own equity that are subject to liability classification and remeasurement each reporting periods.
Revenue Recognition
Our revenues are generated by the sale of mobile semiconductor solutions consisting of products and platform solutions aimed at the LTE and 5G industries, development services, and technical advice and maintenance services.
The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Revenues from sales of our products are recognized upon transfer of control to the customer, which is generally at the time of shipment. Service revenues from development services, technical advice, and maintenance services are generally recognized over time as these performance obligations are satisfied.
We make estimates of potential future returns and sales allowances related to current period product revenue. We analyze historical return rates and changes in customer demand when evaluating the adequacy of returns and sales allowances. Although we believe we have a reasonable basis for our estimates, such estimates may differ from actual returns and sales allowances. These differences may materially impact reported net product revenues and amounts ultimately collected on accounts receivable.
Provision for Credit Losses
Accounts receivable balances are primarily derived from revenues earned from customers located in the United States, China, South Korea, Japan, and Taiwan. We perform ongoing credit evaluations of the financial conditions of our customers and distributors, and generally do not require collateral from our customers. We continuously monitor collections and payments from customers and maintain a provision for credit losses based upon the collectibility of our customer accounts. We review the provision by considering certain
35
Table of Contents
factors such as historical experience, industry data, credit quality, age of balances and current economic conditions that may affect a customer’s ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted and recoveries are recognized when they are recovered. We cannot guarantee that we will continue to experience the same credit loss rates that we had in the past. A significant change in the liquidity or financial position of any of our significant customers could have a material adverse effect on the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $2.6 million and $1.2 million as of September 30, 2025 and December 31, 2024, respectively.
Fair Value of Convertible Promissory Notes
We have made an election to account for our convertible promissory notes under the fair value option, the convertible promissory notes are recorded at their initial fair value on the date of issuance and then are adjusted to fair value upon any modification and at each balance sheet date thereafter. Changes in the estimated fair value of the convertible promissory notes are recognized as non-cash gains or losses in the unaudited condensed consolidated statements of operations within other income (expenses), net.
Our convertible promissory notes are valued using a discounted cash flow (“DCF”) model or binomial lattice model (“BLM”), which are a Level 3 fair value measurements. Significant assumptions used in the DCF include the remaining term and discount rate. Significant assumptions used in the BLM include volatility, remaining term, risk-free rate, and credit spread.
Contracts in Own Equity – Fair Value of Liability-Classified Warrants
We classify share-settled contracts, including warrants to purchase shares of the Company’s common stock, that do not meet the indexation guidance as liabilities. At the end of each reporting period, these liability-classified instruments are remeasured using an option pricing model or BLM. Significant assumptions are used in determining the fair value of our warrants and include volatility and the risk-free rate.
Recent Accounting Pronouncements
See Note 2 to our unaudited condensed consolidated financial statements included herein for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition and results of operations.
JOBS Act Accounting and Smaller Reporting Company Elections
We are an “emerging growth company,” as defined in the JOBS Act. Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies.
We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our unaudited condensed consolidated financial statements may or may not be comparable to companies that comply with new or revised accounting pronouncements as of public companies’ effective dates.
We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company.
We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non- affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
We are a “smaller reporting company”, as defined by Rule 12b‑2 of the Securities and Exchange Act of 1934, as amended (the Exchange Act), and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information otherwise required under this item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of September 30, 2025, management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, has evaluated our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure that were effective as of September 30, 2025.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange Act that occurred during the three months ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitation on the Effectiveness of Internal Controls and Procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently a party to any material legal proceedings. From time to time, we may, however, in the ordinary course of business become involved in legal proceedings. Regardless of outcome, litigation could have a material adverse effect on us due to defense and settlement costs, diversion of management resources, negative publicity, reputational harm and other factors, and there can be no assurances that favorable outcomes will be obtained.
ITEM 1A. Risk Factors.
Other than the risk factors discussed under this section, there have been no material changes to the risk factors we previously disclosed in our Annual Report on Form 10-K filed with the SEC on March 25, 2025. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently consider immaterial to our business.
We have a history of losses, and we may not achieve or sustain profitability in the future, on a quarterly or annual basis.
We began operations in 1998 and have incurred losses on an annual basis since inception. We have incurred and will continue to incur significant operating losses. For the years ended December 31, 2024 and 2023, we had a net loss of $12.4 million and $22.5 million, respectively, and used cash in operating activities of $31.0 million and $8.8 million, respectively. For the nine months ended September 30, 2025, we had a net loss of $34.4 million, and used cash in operating activities of $23.5 million. As of September 30, 2025, we had an accumulated deficit of $596.4 million and negative working capital of approximately $65.2 million. We had short-term debt, including convertible promissory notes and borrowings, in the amount of $64.7 million as of September 30, 2025. As of December 31, 2024, we had an accumulated deficit of $562.0 million and negative working capital of approximately $43.3 million. We had short-term debt in the amount of $37.6 million, including convertible promissory notes and borrowings as of December 31, 2024. We expect to incur significant expenses related to the research and development of our products and expansion of our business. Furthermore, the rapidly evolving wireless communications markets in which we sell our products, as well as other factors, make it difficult for us to forecast quarterly and annual revenue accurately. As a result, we could experience cash flow management problems, unexpected fluctuations in our results of operations and other difficulties, any of which would make it difficult for us to meet our debt obligations and achieve and maintain profitability.
Our unaudited condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary if we are unable to obtain adequate financing in the future. Accordingly, if we do not generate sufficient level of revenue or become profitable, we will be required to seek other sources of funding, such as issuance of equity or debt securities to raise capital. Any such financings may not be accessible on acceptable terms, if at all. The failure to raise additional capital or otherwise obtain funding for our operation will have a material adverse effect on our business, results of operations and financial position.
Our indebtedness could adversely affect our operations, including our ability to perform our obligations and fund working capital.
As of September 30, 2025, we have outstanding convertible promissory notes and borrowings with a total principal amount of $64.4 million, of which $64.4 million is contractually due within 12 months from the reporting date. We may also incur substantial additional indebtedness. Our indebtedness could have important consequences, including the following:
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If any of these consequences occur, our financial condition, and results of operations could be adversely affected. This, in turn, could negatively affect the market price of our Common Stock, and we may need to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. We cannot assure that any refinancing would be possible, that any assets could be sold, or, if sold, of the timing of the sales and the amount of proceeds that may be realized from those sales, or that additional financing could be obtained on acceptable terms, if at all. In addition, while we were able to negotiate with our lenders of commercial loans to extend the maturity dates or modify payment schedules, there is no guarantee that we will be successful in negotiating such terms in the future, and failure to do so may result in defaults under the loans, which will have an adverse effect on our financial conditions and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During the quarter ended September 30, 2025,
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ITEM 6. Exhibits.
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Exhibit Index |
Exhibit |
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Description |
4.1* |
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Form of Warrant |
10.1*‡ |
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Loan Agreement, dated September 10, 2025, by and between Anapass Inc. and GCT Research, Inc. |
31.1* |
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Certification of the Principal Executive Officer pursuant to Rule 13a‑14(a) and Rule 15d‑14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2* |
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Certification of the Principal Financial Officer pursuant to Rule 13a‑14(a) and Rule 15d‑14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1** |
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Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.2** |
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Certification of the Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
101.INS* |
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Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents. |
104 |
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Cover Page formatted as Inline XBRL and contained in Exhibit 101 |
‡ Certain of the exhibits and schedules have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.
* Filed herewith
** The certifications attached as Exhibits 32.1 and 32.2 that accompany this Quarterly Report, are deemed furnished and not filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of GCT Semiconductor Holding, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report, irrespective of any general incorporation language contained in such filing.
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SIGNATURES
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.
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GCT Semiconductor Holding, Inc. |
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Date: November 12, 2025 |
By: |
/s/ John Schlaefer |
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|
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Name: |
John Schlaefer |
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Title: |
Chief Executive Officer |
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GCT Semiconductor Holding, Inc. |
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Date: November 12, 2025 |
By: |
/s/ Edmond Cheng |
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|
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Name: |
Edmond Cheng |
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|
Title: |
Chief Financial Officer |
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FAQ
What were GCTS’s Q3 2025 revenues and net loss?
How did year-to-date results compare for GCTS in 2025?
What is GCTS’s cash position and financing activity?
What near-term obligations does GCTS face?
Does GCTS have a going concern warning?
How many GCTS shares are outstanding?
What equity facilities are available to GCTS?
