GCT Semiconductor Holding, Inc.

Previous wording

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.

Current wording

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 months ended March 31, 2026 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, 2025 and 2024 and related notes included in our Form 10‑K (“Annual Report”) filing with the Securities and Exchange Commission (“SEC”) on March 25, 2026.

Previous wording

Our current product portfolio includes RF and modem chipsets based on 4 th 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.

Current wording

Our current product portfolio includes RF and modem chipsets based on 4 th 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. 5G chipset added to our portfolio recently, with commercial shipments in the fourth fiscal quarter of 2025.

Previous wording

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.

Current wording

Even as more and more applications are deployed on 5G networks, we believe that demand for our existing 4G LTE product lineup (4.75G/4.5G/4G, etc.) will continue, 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. We commenced our first production shipments of our 5G products in the last quarter of 2025. 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.

Previous wording

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.

Current wording

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 described in the section titled “Risk Factors” of our Annual Report on Form 10-K filed with the SEC on March 25, 2026.

Previous wording

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.

Current wording

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 products for use on these networks by OEMs and ODMs that use GCT technology. 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. 5G RedCap and eRedCap appear to be of great interest to wireless carriers, although adoption is limited at this early stage. If an alternative were to appear in the short-to-mid-term this could result in reduced long-term demand for our RedCap and eRedCap chipsets. It should also be noted that RedCap and eRedCap is expected to be a replacement for CatM, Cat1bis and some Cat4 thus eventually reducing demand for the LTE IoT chipsets.

Previous wording

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.

Current wording

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 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.

Previous wording

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.

Current wording

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 (at a time when our 5G product was not available), which resulted in the reduction of 4G activity and a decline in demand for our products.

Previous wording

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.

Current wording

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. Service revenue may include licensing fees, which are recognized upon delivery of the license, generally at a point in time.

Previous wording

Interest expense primarily consists of interest and amortization of related debt issuance costs related to our borrowings and convertible promissory notes.

Current wording

Interest expense primarily consists of interest and amortization of related debt issuance costs related to our borrowings and penalties incurred on our borrowings that are past their maturity dates.

Previous wording

Gain on foreign currency transactions consists of gains, presented net of losses, from transactions denominated in other currencies, primarily South Korean won.

Current wording

Gain (loss) on foreign currency transactions consists of gains or losses, presented on a net basis, from transactions denominated in other currencies, primarily South Korean won.

Previous wording

Change in fair value of common stock forward liability

Current wording

Change in fair value of common stock warrant liabilities

Previous wording

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.

Current wording

Net revenues increased by $1.4 million, from $0.5 million for the three months ended March 31, 2025 to $1.9 million for the three months ended March 31, 2026. This change was due to an increase of $0.4 million in product sales and $1.0 million in service revenues.

Previous wording

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.

Current wording

Product sales increased by $0.4 million, from $0.1 million for the three months ended March 31, 2025 to $0.5 million for the three months ended March 31, 2026. The sales of our LTE platforms increased by $0.3 million dollars for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. Additionally, the sales of our 5G platforms contributed $0.1 million to our product sales during the three months ended March 31, 2026, and there were no 5G platform sales during the three months ended March 31, 2025.

Previous wording

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.

Current wording

Cost of net revenues increased by $0.6 million, from $0.4 million for the three months ended March 31, 2025 to $1.0 million for the three months ended March 31, 2026. This increase was primarily driven by higher direct costs resulting from increased unit volume.

Previous wording

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.

Current wording

Research and development expenses decreased by $0.9 million, from $4.1 million for the three months ended March 31, 2025 to $3.2 million for the three months ended March 31, 2026. This decrease was primarily driven by a $0.5 million reduction in project-specific intellectual property expenses incurred in the first fiscal quarter of 2026 and a $0.4 million reduction in professional services provided by Alpha for the design of 5G chip products after the completion of this development project in the second quarter of 2025.

Previous wording

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.

Current wording

Sales and marketing expenses remained consistent at $1.2 million and $1.1 million for the three months ended March 31, 2026 and 2025, respectively.

Previous wording

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.

Current wording

Interest expense increased by $0.7 million, from $1.1 million for the three months ended March 31, 2025 to $1.8 million for the three months ended March 31, 2026. This increase was primarily due to the penalties incurred on our outstanding loans that are past their maturity dates.

Previous wording

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.

Current wording

Foreign currency transactions resulted in a gain of $2.6 million for the three months ended March 31, 2026 and a nominal gain for the three months ended March 31, 2025. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. The gain in the first quarter of 2026 was driven by higher appreciation of the U.S. dollar against the South Korean won compared to the first quarter of 2025.

Previous wording

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.

Current wording

The change in fair value of common stock warrant liabilities resulted in a loss of $3.1 million for the three months ended March 31, 2026 and a gain of $1.6 million for the three months ended March 31, 2025. The loss in the first quarter of 2026 was driven by a $1.4 million loss from private warrants due to increased volatility, and a $1.7 million loss from public warrants resulting from an increase in their quoted market price. The gain in the first quarter of fiscal 2025 was primarily driven by changes in the fair value of our common stock during the three months ended March 31, 2025.

Previous wording

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.

Current wording

With limited exceptions, we have incurred, and expect to continue to incur, significant operating losses. For the three months ended March 31, 2026, we had a net loss of $9.9 million. For the three months ended March 31, 2026, we used $7.4 million in cash in operating activities. As of March 31, 2026, we had an accumulated deficit of $615.3 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 on the amounts and classification of liabilities, that might be necessary if we are unable to obtain adequate financing in the future. We undertake various activities to finance our operations, as further discussed below.

Previous wording

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.

Current wording

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 March 31, 2026, 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, after B. Riley withheld $1.0 million against the outstanding amounts payable. We have not sold any shares since April 2025.

Previous wording

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.

Current wording

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 three months ended March 31, 2026, we received net proceeds of approximately $12.3 million in cash related to the ATM Offering.

Previous wording

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.

Current wording

In November and December 2024, we entered into term loan agreements with Dr. Kyeongho Lee (“Kyeongho Lee”), the chairman of our board of directors, pursuant to which we borrowed $2.9 million and $2.1 million, originally maturing in December 2024 and January 2025, respectively. In October 2025, we partially repaid to Kyeongho Lee $1.4 million of the term loans originally entered into in December 2024. In January and April 2026, we partially repaid to Kyeongho Lee $0.9 million and $1.2 million of the term loan originally entered in November 2024. The remainder of the term loans originally entered into in November and December 2024 are outstanding as of March 31, 2026. In January 2025, we entered into a term loan agreement with Kyeongho Lee, pursuant to which we borrowed $4.4 million maturing in February 2025, which remained outstanding as of March 31, 2026. For the three months ended March 31, 2026, we incurred penalties of 3% of principal per month on loans in the amount of $0.6 million that are past their maturity dates, calculated daily until the principal and accrued interest are paid. Outstanding penalties payable to Kyeongho Lee as of March 31, 2026 are $2.7 million.

Previous wording

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.

Current wording

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 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., pursuant to which we borrowed $2.1 million maturing in July 2026. In August 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $1.4 million maturing in August 2026. In September 2025, we entered into a term loan agreement with Anapass, Inc., pursuant to which we borrowed $10.7 million maturing in September 2026. In July 2025, we executed an amendment with Anapass, Inc. to extend the maturity date of a term loan, originally entered into in July 2016 with a principal of $4.5 million, from July 2025 to July 2026. In November 2025, we 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 $2.2 million, from November 2025 to November 2026. In December 2025, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in December 2024 with a principal of $3.4 million from December 2025 to December 2026. In March 2026, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in March 2025 with a principal of $3.1 million from March 2026 to March 2027 and change the annual interest rate from 6.5% to 7.0%.

Previous wording

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.

Current wording

We expect significant ongoing operating expenditures to be necessary to successfully implement our business plan and market our products. Production shipments of our 5G products commenced in the fourth quarter of 2025, and we expect continued significant related expenditures, including production-related costs such as mask sets, wafers, and assembly and test costs, most of which will be incurred prior to the commencement of manufacturing and production.

Previous wording

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.

Current wording

As of March 31, 2026, our existing sources of liquidity include $7.2 million in cash and cash equivalents. Our internal sources of liquidity consist primarily of cash on hand and cash generated from operations (which has historically been negative). Our external sources include our ability to raise capital under our shelf registration statement, including the ATM, ELOC, the Indigo Facility and Obsidian Facility, and debt financings and extensions with lenders, including related parties. These external sources represent potential unused liquidity; however, the amount and timing of any proceeds depend on market conditions, contractual limitations, and our ability to satisfy applicable conditions. As of March 31, 2026, we have borrowings with a total principal amount of $52.1 million, which are contractually due within 12 months from this Quarterly Report. In addition, we have borrowings with a total principal amount of $0.7 million and a convertible promissory note with a principal amount of $5.0 million, which are contractually due between one and three years 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.

Previous wording

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.

Current wording

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 we will be able to secure additional capital and funding in the next 12 months to sustain our operations, there remains a substantial doubt about 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 filed with the SEC on March 25, 2026.

Previous wording

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.

Current wording

We intend to mitigate the risk of a working capital deficit by continuing to pursue our 5G sales strategy and execute appropriate actions to secure funding as a publicly traded company, including the extension and refinancing of existing loans, public or private equity offerings, debt financings, and other means. In the second fiscal quarter of 2025, we filed a universal shelf registration statement on Form S-3 that allows us to raise up to $200.0 million through the issuance of our securities, including the $75.0 million for the ATM Offering.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.

Previous wording

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.

Current wording

While we believe we have a reasonable basis for our expectations and 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.

Previous wording

Cash Flow Comparison for the Nine Months Ended September 30, 2025 and 2024

Current wording

Cash Flow Comparison for the Three Months Ended March 31, 2026 and 2025

Previous wording

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.

Current wording

During the three months ended March 31, 2026 and 2025, we funded our operations primarily through financing activities. This included the proceeds from the issuance of debt instruments, primarily to third parties in the first fiscal quarter of 2026 and related parties in the first fiscal quarter of 2025. We remain dependent on cash inflows from financing activities to fund our operating expenses. The repayment of the outstanding borrowings 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.

Previous wording

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.

Current wording

Cash used in operating activities of $7.4 million during the three months ended March 31, 2026, was primarily attributable to our net loss of $9.9 million and a net change in our operating assets and liabilities of $3.6 million, partially offset by non-cash adjustments of $6.0 million. Non-cash adjustments consisted primarily of a $3.1 million loss from the change in fair value of warrant liabilities, a $1.3 million loss from the change in fair value of convertible promissory notes, a $0.6 million increase in provision for credit losses, $0.4 million in stock-based compensation, $0.3 million in depreciation and amortization charges, $0.2 million in amortization of operating lease right-of-use assets and $0.2 million related to the fair value of common stock warrants issued in connection with a convertible note extension. The change in our operating assets and liabilities of $3.6 million primarily resulted from a decrease of $2.5 million in accrued and other current liabilities, an increase of $0.6 million in inventory, an increase of $0.5 million in prepaid expenses and other current assets, an increase of $0.4 million in accounts receivable, and a decrease of $0.2 million in lease liabilities, partially offset by a decrease of $0.3 million in contract assets, an increase of $0.1 million in contract liabilities, and an increase of $0.1 million in other liabilities.

Previous wording

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.

Current wording

Cash used in operating activities of $8.0 million during the three months ended March 31, 2025 was primarily attributable to our net loss of $7.0 million, non-cash adjustments of $0.8 million, and a net change in our operating assets and liabilities of $0.2 million. Non-cash adjustments consisted primarily of a $1.6 million gain from the change in fair value of warrant liabilities and a $0.3 million gain from the change in fair value of common stock forward liability, partially offset by $0.5 million in stock-based compensation, a $0.3 million increase in provision for credit losses, $0.2 million in depreciation and amortization charges, and $0.2 million in amortization of operating lease right-of-use assets. The change in our operating assets and liabilities of $0.2 million primarily resulted from a decrease of $1.9 million in accrued and other current liabilities, an increase of $0.4 million in contract assets, a decrease of $0.2 million in other liabilities, a decrease of $0.2 million in lease liabilities, an increase of $0.1 million in inventory, and a decrease of $0.1 million in other taxes payable, partially offset by a decrease of $1.1 million in prepaid expenses and other current assets, a decrease of $0.9 million in accounts receivable, an increase of $0.4 million in accounts payable, and an increase of $0.2 million in net defined benefit liabilities.

Previous wording

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.

Current wording

Cash used in investing activities during the three months ended March 31, 2026 and 2025 was related solely to the purchases of property and equipment.

Previous wording

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, 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.

Current wording

Cash provided by financing activities of $14.1 million during the three months ended March 31, 2026, consisted of $12.7 million in proceeds from the issuance of common stock under the at-market agreement and $2.8 million in proceeds from the issuance of convertible promissory notes, partially offset by a $0.9 million repayment of our bank borrowings and a $0.4 million payment of common stock issuance costs.

Previous wording

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.

Current wording

Cash provided by financing activities of $7.7 million during the three months ended March 31, 2025 consisted of $7.5 million in proceeds from borrowings and $0.2 million in proceeds received from the issuance of common stock to B. Riley under the Purchase Agreement.

Previous wording

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.

Current wording

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 Quarterly Report for more information regarding our additional commitments and contractual obligations.

Previous wording

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.

Current wording

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 Quarterly Report for more information regarding our debt arrangements.

Previous wording

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.

Current wording

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 other factors we believe are reasonable under the circumstances, which form the basis for 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 inherent uncertainty in making them, and any such differences may be material.

Previous wording

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.

Current wording

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 Annual Report filed with the SEC on March 25, 2026, except that from the Closing we have certain contracts in our own equity that are subject to liability classification and remeasurement each reporting periods.