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, 2025 and related notes appearing elsewhere in this 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 and six months ended June 30, 2025 and related notes appearing elsewhere in this 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.

Previous wording

We are a fabless semiconductor company that specializes in the design, manufacturing and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers (“RF”) and modems, which are essential for a wide variety of industrial, B2B and consumer applications. We have successfully developed and supplied communication semiconductor chipsets and modules to leading wireless operators worldwide, as well as to original design manufacturers (“ODMs”) and original equipment manufacturers (“OEMs”) for portable wireless routers (e.g., Mobile Router (“MiFi”)), indoor and outdoor fixed wireless routers (e.g., customer premise equipment (“CPE”)), industrial machine-to-machine (“M2M”) applications and smartphones.

Current wording

We are a fabless semiconductor company that specializes in the design, manufacturing and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers (“RF”) and modems, which are essential for a wide variety of industrial, business-to-business (“B2B”) and consumer applications. We have successfully developed and supplied communication semiconductor chipsets and modules to leading wireless operators worldwide, as well as to original design manufacturers (“ODMs”) and original equipment manufacturers (“OEMs”) for portable wireless routers (e.g., Mobile Router (“MiFi”)), indoor and outdoor fixed wireless routers (e.g., customer premise equipment (“CPE”)), industrial machine-to-machine (“M2M”) applications and smartphones.

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. We expect the introduction of our 5G products in the second 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 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 anticipate the commercial launch of our 5G products in the second half 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

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 expand further the markets for Internet of Things devices. If deployments of the Cat M or Cat NB standards are delayed or if competing standards for Internet of Things 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 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 expand further 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.

Previous wording

accurate prediction of the growth of the Internet of Things markets and the timing of commercial availability of 4G and 5G networks;

Current wording

accurate prediction of the growth of the IoT markets and the timing of commercial availability of 4G and 5G networks;

Previous wording

Change in fair value of common stock warrant liabilities

Current wording

Common stock forward liability represents a freestanding common stock forward contract under the purchase agreement (“Purchase Agreement”) with B. Riley B. Riley Principal Capital II, LLC (“B. Riley”) executed in April 2024, which contains a variable share forward on our common stock. This freestanding instrument is precluded from equity classification since the Purchase Agreement with B. Riley requires shareholder approval for the issuance of shares in excess of the applicable ownership limitation caps, which is not an input in a fixed-for-fixed option or forward on equity shares. The fair value of this liability reflects the probability-adjusted present value of the discount to be provided to B. Riley for sales of our common stock under the Purchase Agreement, relative to the volume-weighted average price of our common stock during the applicable pricing period. Change in fair value of common stock forward liability includes measurement gains and losses driven by the change in the probability of scenarios to sell certain number of shares under the Purchase Agreement.

Previous wording

Product costs decreased by $0.4 million, or 68%, from $0.7 million for the three months ended March 31, 2024 to $0.2 million for the three months ended March 31, 2025. This decrease in product costs was primarily driven by a decrease in our direct costs as we sold fewer units.

Current wording

Product costs increased by $0.4 million, or 268%, from $0.2 million for the three months ended June 30, 2024 to $0.6 million for the three months ended June 30, 2025. This increase in product costs was primarily driven by direct costs associated with unit sales.

Previous wording

Service costs decreased by $0.5 million, or 69%, from $0.7 million for the three months ended March 31, 2024 to $0.2 million for the three months ended March 31, 2025. This decrease in service costs was driven primarily by the reduction in direct costs as we were engaged in service projects with a lower scope.

Current wording

Service costs decreased by $0.2 million, or 43%, from $0.4 million for the three months ended June 30, 2024 to $0.2 million for the three months ended June 30, 2025. This decrease in service costs was commensurate with the level of our service project activity.

Previous wording

The change in fair value of common stock warrant liabilities resulted in a gain of $1.6 million for the three months ended March 31, 2025 and a loss of $4.6 million for the three months ended March 31, 2024. The respective gain and loss were both driven by changes in the fair value of our common stock during each of the respective periods.

Current wording

The change in fair value of common stock warrant liabilities resulted in a loss of $1.0 million for the three months ended June 30, 2025 and a gain of $6.6 million for the three months ended June 30, 2024. The respective loss and gain were both driven by changes in the fair value of our common stock during the respective periods.

Previous wording

Net revenues decreased by $2.8 million, or 85%, from $3.3 million for the three months ended March 31, 2024 to $0.5 million for the three months ended March 31, 2025. The reduction was primarily attributable to a decrease of $2.3 million in product sales and a decrease of $0.5 million in service revenue.

Current wording

Net revenues decreased by $3.1 million, or 65%, from $4.7 million for the six months ended June 30, 2024 to $1.7 million for the six months ended June 30, 2025. The reduction was primarily attributable to a decrease of $1.9 million in product sales and a decrease of $1.2 million in service revenue.

Previous wording

Cost of net revenues decreased by $0.9 million, or 69%, from $1.3 million for the three months ended March 31, 2024 to $0.4 million for the three months ended March 31, 2025. This decrease in the cost of net revenues was driven primarily by the reduction in our product sales and involvement in service projects.

Current wording

Cost of net revenues decreased by $0.6 million, or 35%, from $1.9 million for the six months ended June 30, 2024 to $1.2 million for the six months ended June 30, 2025. This decrease in the cost of net revenues was driven primarily by the reduction in our service costs that was commensurate with the level of our service project activity.

Previous wording

Research and development expenses decreased by $1.4 million, or 26%, from $5.5 million for the three months ended March 31, 2024 to $4.1 million for the three months ended March 31, 2025. This decrease was primarily due to $1.3 million related to project-specific intellectual property expenses incurred during the first fiscal quarter of 2024.

Current wording

Research and development expenses decreased by $2.1 million, or 21%, from $9.7 million for the six months ended June 30, 2024 to $7.6 million for the six months ended June 30, 2025. This decrease was primarily due to a $1.4 million reduction in professional services provided by Alpha related to the design of 5G chip products and a $1.4 million reduction in the project-specific intellectual property expenses, partially offset by a $0.5 million increase in the personnel-related costs.

Previous wording

Gain on extinguishment of liability was $14.6 million for the three months ended March 31, 2024 due to the release by a vendor of amounts payable by us for research and development services received in prior years. No similar transactions took place during the year ended three months ended March 31, 2025.

Current wording

Gain on extinguishment of liability was $14.6 million for the six months ended June 30, 2024 due to the release by a vendor of amounts payable by us for research and development services received in prior years. No similar transactions took place during the year ended six months ended June 30, 2025.

Previous wording

Interest expense decreased by $1.0 million or 49%, from $2.1 million for the three months ended March 31, 2024 to $1.1 million for the three months ended March 31, 2025. This decrease was primarily due to the conversion of significant amounts of outstanding convertible notes and repayment of outstanding borrowings during 2024.

Current wording

Interest expense decreased by $0.2 million or 8%, from $2.8 million for the six months ended June 30, 2024 to $2.6 million for the six months ended June 30, 2025. This decrease was primarily due to the conversion of significant amounts of outstanding convertible notes and repayment of outstanding borrowings during 2024.

Previous wording

Loss from changes in fair value of convertible promissory notes was $1.2 million for the three months ended March 31, 2024 and less than $0.1 million for the three months ended March 31, 2025. These losses in each year were derived from the fair value measurement and related assumptions, specifically remeasurement of the convertible notes prior to their settlement in our common stock, which significantly increased the underlying liability during the three months ended March 31, 2024.

Current wording

Losses from changes in fair value of convertible promissory notes were less than $0.2 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively. These losses in each year were derived from the fair value measurement and related assumptions, specifically remeasurement of the convertible notes prior to their settlement in our common stock, which significantly increased the underlying liability during the six months ended June 30, 2024.

Previous wording

With limited exceptions, we have incurred and expect that we will continue to incur significant operating losses. For the three months ended March 31, 2025, we had a net loss of $7.0 million. For the three months ended March 31, 2025 and 2024, we had cash used in operating activities of $8.0 million and $14.4 million, respectively. As of March 31, 2025, we had an accumulated deficit of $569.0 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 that we will continue to incur significant operating losses. For the six months ended June 30, 2025, we had a net loss of $20.5 million. For the six months ended June 30, 2025 and 2024, we had cash used in operating activities of $16.6 million and $24.1 million, respectively. As of June 30, 2025, we had an accumulated deficit of $582.5 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.

Previous wording

In April 2024, we entered into a common stock purchase agreement (the “Purchase Agreement”) and a related registration rights agreement (the “Registration Rights Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, 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, 2025, we sold an aggregate of 2,438,037 shares of our common stock for $9.9 million under the Purchase Agreement and received cash proceeds of $8.7 million and $1.0 million was withheld by B. Riley against the outstanding amounts payable. In addition, in April 2025 we sold 700 shares of our common stock under the Purchase Agreement and received cash proceeds of approximately $1,000.

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 June 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.

Previous wording

In April 2025, weexecuted an at-market issuance sales agreement (the “ATM Agreement”) with B. Riley Securities, Inc. 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”). The ATM Offering is being undertaken pursuant to Rule 415 and a universal shelf registration statement on Form S-3 which was declared effective by the SEC on April 9, 2025. From April 1, 2025 through May 9, 2025, we sold 103,106 shares of our common stock under the ATM Agreement for gross proceeds of approximately $0.2 million that were received in cash. An additional 50.0 million shares of common stock have been registered for sale in the ATM Offering, which may continue unless terminated sooner as provided for in the Sales Agreement with sales agents. 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.

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 June 30, 2025, we received net proceeds of approximately $0.5 million in cash related to the ATM Offering.

Previous wording

We remain dependent on additional fundraising in order to sustain our ongoing operations. In November and December 2024, we entered into term loan agreements with Kyeongho Lee, our related party, pursuant to which we borrowed $2.9 million and $2.1 million, maturing in December 2024 and January 2025, respectively. In December 2024, we entered into a term loan agreement with Anapass, Inc. pursuant to which we borrowed $3.4 million maturing in December 2025. 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, 2025. In March 2025, we entered into a term loan agreement with Anapass, Inc., our related party, pursuant to which we borrowed $3.1 million maturing in March 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 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 June 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 $2.2 million that will mature in July 2026. In August 2025, we entered into a term loan agreement with Anapass, Inc. and borrowed $1.5 million that will mature in August 2026.

Previous wording

During February 2025, we were able to renegotiate the timing of payments for some of the obligations, including loan agreements with i Best Investment Co., Ltd, that initially were due in the first fiscal quarter of 2025.

Current wording

During six months ended June 30, 2025, we were able to renegotiate the timing of payments for some of the obligations, including loan agreements with i Best Investment Co., Ltd and Dr. Lee, that initially were due in the first and second fiscal quarter of 2025, respectively.

Previous wording

While a portion of the cash proceeds received in connection with the Business Combination was expended to support our 5G activity and fund other operational expenses, we expect that further and significant ongoing operating expenditures will be necessary to successfully implement our business plan and market our products. With the start of manufacturing, shipments and commercialization of our first 5G chipset expected during the first half of 2025, we anticipate significant related expenditures in the form of production-related costs, including mask sets, wafers, and design service fees, and most such costs will be incurred prior to the commencement of manufacturing and production.

Current 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 anticipate the commercial launch of our 5G products in the second half of 2025. 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.

Previous wording

As of March 31, 2025, our existing sources of liquidity include cash and cash equivalents of $1.0 million. As of March 31, 2025, we have outstanding convertible promissory notes and borrowings with a total principal amount of $50.2 million, which are entirely contractually due within 12 months from this reporting date. 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, 2025, our existing sources of liquidity include cash and cash equivalents of $1.3 million. As of June 30, 2025, we have outstanding convertible promissory notes and borrowings with a total principal amount of $51.7 million, which are contractually due within 12 months from this reporting date. 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 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. 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 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, 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.

Previous wording

We expect to use such additional liquidity and the cash and cash equivalents available to us after the Closing to finance the following activities:

Current wording

We expect to use additional liquidity and our available cash and cash equivalents to finance the following activities:

Previous wording

While we believe that we have a reasonable basis for our expectation and we will be available 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 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.

Previous wording

Cash Flow Comparison for the Three Months Ended March 31, 2025 and 2024

Current wording

Cash Flow Comparison for the Six Months Ended June 30, 2025 and 2024

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 income tax payables, 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 income tax payables, and a decrease of $0.2 million in other liabilities.

Previous wording

Cash used in operating activities of $14.4 million during the three months ended March 31, 2024 was primarily attributable to our net income of $0.8 million, offset by non-cash adjustments of $7.0 million, and a net change in our operating assets and liabilities of $8.2 million. Non-cash adjustments consisted primarily of a $14.6 million gain from the extinguishment of a liability, partially offset by a $4.6 million loss from the change in fair value of warrant liabilities, $1.2 million gain from the change in fair value of convertible promissory notes, $1.2 million in stock-based compensation, $0.2 million in depreciation and amortization charges, $0.2 million in operating lease right-of-use amortization, and $0.2 million in provision for credit losses. The change in our operating assets and liabilities of $8.2 million primarily resulted from a decrease in $2.7 million in accounts payable, a decrease of $1.1 million in our accrued and other current liabilities, and a decrease of $0.3 million in other liabilities due to the payment of costs incurred related to our Business Combination, as well as an increase of $2.3 million in prepaid expenses and other current assets related to the timing of payments for inventory and manufacturing of wafers, an increase of $0.9 million in in contract assets due to unbilled services provided under certain projects, an increase of $0.5 million in accounts receivable primarily due to slower collections from certain customers, an increase of $0.3 million in inventory due to lower sales, and a decrease of $0.2 million in our lease liabilities.

Current wording

Cash used in operating activities of $24.1 million during the six months ended June 30, 2024, was primarily attributable to our net loss of $0.3 million, non-cash adjustments of $12.5 million, and a net change in our operating assets and liabilities of $11.3 million. Non-cash adjustments consisted primarily of a $14.6 million gain from the extinguishment of a liability, $2.0 million gain from the change in fair value of warrant liabilities, and $0.5 million in provision for credit losses, partially offset by $1.5 million in stock-based compensation, $1.2 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, $0.4 million in depreciation and amortization charges and $0.3 million in operating lease right-of-use amortization. The change in our operating assets and liabilities of $11.3 million primarily resulted from a decrease of $4.4 million in our accrued and other current liabilities, a decrease of $3.4 million in accounts payable, an increase of $1.7 million in prepaid expenses and other current assets related to the timing of payments for inventory and manufacturing of wafers, an increase of $1.2 million in contract assets due to unbilled services provided under certain projects, an increase of $0.5 million in inventory due to lower sales, a decrease of $0.4 million in other liabilities, and a decrease of $0.3 million in our lease liabilities, partially offset by an increase of $0.4 million in net defined benefit liabilities, and a decrease of $0.3 million in accounts receivable primarily due to slower collections from certain customers.

Previous wording

Cash used in investing activities during the three months ended March 31, 2025 was related solely to the purchases of property and equipment. There were no cash flows related to our investing activities during the three months ended March 31, 2024.

Current wording

Cash used in investing activities during the six months ended June 30, 2025 and 2024 was related solely to the purchases of property and equipment.

Previous wording

Cash provided by financing activities of $30.3 million during the three months ended March 31, 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, partially offset by $3.2 million repayment of our bank borrowings.

Current wording

Cash provided by financing activities of $27.9 million during the six months ended June 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 $2.8 million proceeds received from the issuance of common stock to B. Riley under the Purchase Agreement, partially offset by $7.9 million repayment of our bank borrowings and $0.6 million repayment of convertible promissory notes.

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 conditions of our customers and distributors, and generally do not require collateral from our customers. We continuously monitor collections and payments from customers and maintain a provision for credit losses based upon the collectibility of our customer accounts. We review the provision by considering certain factors such as historical experience, industry data, credit quality, age of balances and current economic conditions that may affect a customer’s ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted and recoveries are recognized when they are recovered. We cannot guarantee that we will continue to experience the same credit loss rates that we had in the past. A significant change in the liquidity or financial position of any of our significant customers could have a material adverse effect on the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $1.5 million and $1.2 million as of March 31, 2025 and December 31, 2024, 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 conditions of our customers and distributors, and generally do not require collateral from our customers. We continuously monitor collections and payments from customers and maintain a provision for credit losses based upon the collectibility of our customer accounts. We review the provision by considering certain factors such as historical experience, industry data, credit quality, age of balances and current economic conditions that may affect a customer’s ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted and recoveries are recognized when they are recovered. We cannot guarantee that we will continue to experience the same credit loss rates that we had in the past. A significant change in the liquidity or financial position of any of our significant customers could have a material adverse effect on the collectibility of our accounts receivable and our future operating results. The provision for credit losses was $2.6 million and $1.2 million as of June 30, 2025 and December 31, 2024, respectively.