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 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.

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 and six months ended June 30, 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”), filed 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. 5G chipset added to our portfolio recently, with commercial shipments in the fourth fiscal quarter of 2025.

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 was 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 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.

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. We also 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

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.

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 narrowband 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 are expected to be replacements for CatM, Cat1bis and some Cat4 thus eventually reducing demand for the LTE IoT chipsets.

Previous wording

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.

Current wording

The markets in which our customers and we 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.

Previous 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.

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 supply of our wafers and products. We do not have any formal foundry agreements that guarantee a minimum level of manufacturing capacity. In times of significantly 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

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.

Current wording

Net revenues decreased by $0.2 million, from $1.2 million for the three months ended June 30, 2025 to $1.0 million for the three months ended June 30, 2026. This change was due to a decrease of $0.2 million in service revenues.

Previous wording

Service revenues increased by $1.0 million, from $0.4 million for the three months ended March 31, 2025 to $1.4 million for the three months ended March 31, 2026. The increase was due to the addition of 5G revenue during the three months ended March 31, 2026, which contributed $1.4 million to our service revenue, and there was no 5G service revenue during the three months ended March 31, 2025. This increase was partially offset by a $0.4 million decrease in LTE service revenue as our service project portfolio shifted to 5G service offerings.

Current wording

Service revenues decreased by $0.2 million, from $0.8 million for the three months ended June 30, 2025 to $0.6 million for the three months ended June 30, 2026. The decrease was primarily due to a $0.8 million decrease in LTE service revenue as our service project portfolio shifted to 5G service offerings, partially offset by a $0.6 million increase in 5G service revenue.

Previous wording

Changes in service costs were nominal.

Current wording

Changes in service costs were not material.

Previous 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.

Current wording

Sales and marketing expenses remained consistent at $1.1 million and $1.0 million for the three months ended June 30, 2026 and 2025, respectively.

Previous 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.

Current wording

Foreign currency transactions resulted in a gain of $0.8 million for the three months ended June 30, 2026 and a loss of $3.2 million for the three months ended June 30, 2025. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. During the second quarter of 2025, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses, while during the second quarter of 2026, the South Korean won depreciated against the U.S. dollar, resulting in foreign currency gains.

Previous 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.

Current wording

Net revenues increased by $1.2 million, from $1.7 million for the six months ended June 30, 2025 to $2.9 million for the six months ended June 30, 2026. This change was due to an increase of $0.4 million in product sales and $0.8 million in service revenues.

Previous 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.

Current wording

Research and development expenses decreased by $1.1 million, from $7.6 million for the six months ended June 30, 2025 to $6.5 million for the six months ended June 30, 2026. This decrease was primarily driven by a $0.9 million reduction in professional services provided by Alpha for the design of 5G chip products following the completion of this development project in the second quarter of 2025, and a $0.5 million reduction in project-specific intellectual property expenses incurred in the six months ended June 30, 2026, partially offset by net increases in other research and development costs of $0.3 million.

Previous 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.

Current wording

Interest expense increased by $0.4 million, from $2.6 million for the six months ended June 30, 2025 to $3.0 million for the six months ended June 30, 2026. This increase was primarily due to the penalties incurred on our outstanding loans that are past their maturity dates.

Previous 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.

Current wording

2025, we used $24.0 million and $16.6 million in cash in operating activities, respectively. As of June 30, 2026, we had an accumulated deficit of $635.6 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 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.

Current wording

In April 2025, we entered into an at-market issuance sales agreement (“ATM Agreement”) with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, acting as sales agents, pursuant to which we may sell shares of our common stock through at-the-market offerings or to the sales agents as principal purchasers (“ATM Offering”). In June 2026, we amended the ATM Agreement to increase the maximum aggregate gross proceeds from $75.0 million to $120.0 million. As there is no commitment for future sales of additional shares under the at-market issuance sales agreement or the ATM Offering, we cannot predict how much, if any, additional proceeds may be realized. During the six months ended June 30, 2026, we received net proceeds of approximately $53.8 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 (“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.

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. In June 2026, we fully paid off the remaining loan of $0.7 million originally entered into in November 2024. The remainder of the term loan originally entered into in December 2024 is outstanding as of June 30, 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 June 30, 2026. For the six months ended June 30, 2026, we incurred penalties of 3% of principal per month on loans in the amount of $1.1 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 June 30, 2026 are $1.5 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 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%.

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 July 2026, we executed an amendment with Anapass, Inc. to extend the maturity date from July 2026 to July 2027 for the term loan with a principal amount of $2.1 million. 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 August 2026, we executed an amendment with Anapass, Inc. to extend the maturity date from August 2026 to August 2027 and change the annual interest rate from 6.5% to 7.0%. 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%. In July 2026, we partially repaid KRW 2.0 billion ($1.3 million) of the promissory note issued to Anapass, Inc. and entered into an amendment with Anapass, Inc. to extend the maturity date of the promissory note with the remaining outstanding principal of KRW 4.0 billion ($2.6 million) from July 2026 to July 2027 and change the annual interest rate from 5.5% to 7.0%.

Previous wording

In December 2025, we issued two Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $1.9 million, reflecting the discount at issuance. In December 2025, the first Indigo Note was converted into 903,710 shares of our common stock. During the three months ended March 31, 2026, we issued three Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $2.8 million, reflecting the discount at issuance. During the three months ended March 31, 2026, the Indigo Notes with principal amount of $4.0 million converted into 4.4 million shares of common stock. No Indigo Notes remained outstanding as of March 31, 2026.

Current wording

In December 2025, we issued two Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $1.9 million, reflecting the discount at issuance. In December 2025, the first Indigo Note was converted into 903,710 shares of our common stock. During the six months ended June 30, 2026, we issued three Indigo Notes, each with a principal amount of $1.0 million, and received gross proceeds of $2.8 million, reflecting the discount at issuance. During the six months ended June 30, 2026, the Indigo Notes with principal amount of $4.0 million converted into 4.4 million shares of common stock. No Indigo Notes remained outstanding as of June 30, 2026.

Previous wording

Each Obsidian Note will be issued at a purchase price equal to 96.5% of its principal amount. Each Obsidian Note will mature 24 months from its issuance date and is convertible into our common stock at any time on or before its maturity date unless redeemed by us. The conversion price is 95% of the reference price, which is calculated as the lowest VWAP of our common stock over the three trading days prior to the submission of a conversion notice by Obsidian. No interest is payable on the Obsidian Notes, and we have an optional redemption right beginning 12 months following the issuance of the Obsidian Notes. Redemption between 12 and 18 months from issuance carries a 7% premium on the principal amount redeemed, increasing to 14% if redeemed between 18 months and maturity.

Current wording

Each Obsidian Note will be issued at a purchase price equal to 96.5% of its principal amount. Each Obsidian Note will mature 24 months from its issuance date and is convertible into our common stock at any time on or before its maturity date unless redeemed by us. The conversion price is 95% of the reference price, which is calculated as the average VWAP of our common stock over the three trading days prior to the submission of a conversion notice by Obsidian. No interest is payable on the Obsidian Notes, and we have an optional redemption right beginning 12 months following the issuance of the Obsidian Notes. Redemption between 12 and 18 months from issuance carries a 7% premium on the principal amount redeemed, increasing to 14% if redeemed between 18 months and maturity.

Previous 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.

Current wording

As of June 30, 2026, our existing sources of liquidity include $30.2 million in cash and cash equivalents. Our current sources of available financing include convertible debt and equity offerings, including under the ATM Offering, the Indigo Facility, the 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 June 30, 2026, we have borrowings with a total principal amount of $39.1 million, which are contractually due within 12 months from this Quarterly Report. In addition, we have borrowings with a total principal amount of $11.0 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

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.

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 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

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

Current wording

Cash Flow Comparison for the Six Months Ended June 30, 2026 and 2025

Previous 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.

Current wording

During the six months ended June 30, 2026 and 2025, we funded our operations primarily through financing activities. This included proceeds from the issuance of common stock under the ATM Agreement in the first half of 2026, and from a registered direct offering and borrowings from related parties in the first half 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 $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.

Current wording

Cash used in operating activities of $24.0 million during the six months ended June 30, 2026, was primarily attributable to our net loss of $30.2 million and a net change in our operating assets and liabilities of $13.7 million, partially offset by non-cash adjustments of $19.9 million. Non-cash adjustments consisted primarily of a $15.4 million loss from the change in fair value of warrant liabilities, a $1.5 million loss from the change in fair value of convertible promissory notes, a $1.1 million increase in provision for credit losses, $0.8 million in stock-based compensation, $0.6 million in depreciation and amortization charges, $0.3 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 $13.7 million primarily resulted from a decrease of $7.2 million in accrued and other current liabilities, an increase of $6.4 million in prepaid expenses and other current assets, an increase of $0.5 million in inventory, a decrease of $0.4 million in accounts payable, a decrease of $0.4 million in lease liabilities, partially offset by an increase of $0.4 million in net defined benefit liabilities, a decrease of $0.3 million in accounts receivable, a decrease of $0.3 million in contract assets, and an increase of $0.2 million in other liabilities.

Previous 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.

Current wording

Cash used in operating activities of $16.6 million during the six months ended June 30, 2025, was primarily attributable to our net loss of $20.5 million, non-cash adjustments of $2.3 million, and a net change in our operating assets and liabilities of $1.6 million. Non-cash adjustments consisted primarily of a $1.4 million increase in provision for credit losses, $1.0 million in stock-based compensation, $0.3 million in amortization of operating lease right-of-use assets, $0.3 million in depreciation and amortization charges, and a $0.2 million loss from the change in fair value of convertible promissory notes, partially offset by a $0.6 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. The change in our operating assets and liabilities of $1.6 million primarily resulted from a decrease of $1.3 million in prepaid expenses and other current assets, an increase of $1.2 million in accrued and other current liabilities, an increase of $1.1 million in net defined benefit liabilities, a decrease of $0.5 million in accounts receivable, and a $0.1 million decrease in other assets, partially offset by an increase of $0.9 million in contract assets, a decrease of $0.8 million in lease liabilities, a decrease of $0.5 million in accounts payable, a decrease of $0.3 million in other taxes payable, and a decrease of $0.2 million in other liabilities.

Previous 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.

Current wording

Cash used in investing activities during the six months ended June 30, 2026 and 2025 was related solely to the purchases of property and equipment.

Previous 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.

Current wording

Cash provided by financing activities of $54.0 million during the six months ended June 30, 2026, consisted of $55.7 million in proceeds from the issuance of common stock under the ATM Agreement and $2.8 million in proceeds from the issuance of convertible promissory notes, partially offset by a $2.6 million repayment of our bank borrowings and a $1.8 million payment of common stock issuance costs.

Previous 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.

Current wording

Cash provided by financing activities of $16.1 million during the six months ended June 30, 2025 consisted of $11.0 million gross proceeds received from the issuance of common stock in a registered direct offering, $7.5 million in proceeds from borrowings, and $0.5 million in proceeds from the issuance of common stock under the ATM Agreement, partially offset by a $2.2 million repayment of our bank borrowings and a $0.8 million payment of common stock issuance costs.

Previous wording

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 condition 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 on the collectibility of our customer accounts. We review the provision 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. 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 materially affect the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $4.6 million and $4.0 million as of March 31, 2026 and December 31, 2025, respectively.

Current wording

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 condition 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 on the collectibility of our customer accounts. We review the provision 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. 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 materially affect the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $5.2 million and $4.0 million as of June 30, 2026 and December 31, 2025, respectively.

Previous wording

Contracts in Own Equity – Fair Value of Liability-Classified Warrants

Current wording

Fair Value of Liability-Classified Warrants

Previous wording

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 the BLM. Significant assumptions are used in determining the fair value of our warrants and include volatility and the risk-free rate.

Current wording

We classify share-settled contracts, including private placement 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 the BLM. Significant assumptions are used in determining the fair value of our warrants and include volatility and the risk-free rate.

Previous wording

Our EGC status commenced upon the completion of the initial public offering of Concord III in November 2021 and is expected to continue for up to five years from this date through November 2026, unless certain disqualifying events occur earlier, such as achieving large accelerated filer status.

Current wording

Our EGC status commenced upon the completion of the initial public offering of Concord Acquisition Corp III, our predecessor, in November 2021. Our EGC status is expected to continue for up to five years from this date, through November 2026, unless certain disqualifying events occur earlier, such as achieving large accelerated filer status.