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 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.

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 nine months ended September 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 Annual Report on Form 10‑K (“Annual Report”), filed with the Securities and Exchange Commission (“SEC”) on March 25, 2026.

Previous wording

We oversee sales, marketing, and accounting operations from our headquarters in San Jose, California. The Company conducts product design, development, and customer support through our wholly owned subsidiaries located in South Korea, one of which serves as our research and development center. In addition, we utilize separate sales offices for local technical support and sales in Taiwan, China, and Japan.

Current wording

We oversee sales, marketing, and accounting operations from our headquarters in San Jose, California. We conduct product design, development, and customer support through our wholly owned subsidiaries located in South Korea, one of which serves as our research and development center. In addition, we maintain sales offices in Taiwan, China and Japan that provide local sales and technical support.

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 was 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. We also develop and sell 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. 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.

Current wording

Even as 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 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 going forward. 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

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.

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. Currently, significant semiconductor manufacturing capacity is being directed to artificial intelligence (“AI”) applications, resulting in shortages, longer lead times and higher costs in other areas, including 4G/5G connectivity. Similarly, memory manufacturers are prioritizing high-bandwidth memory for AI applications, which has led to a continued shortage of memory chips and significantly longer lead times and higher costs for memory needed by us and our customers.

Previous wording

Product sales increased by $0.4 million, from $0.5 million for the six months ended June 30, 2025 to $0.9 million for the six months ended June 30, 2026. The increase was primarily due to a $0.4 million increase in 5G platform product sales during the six months ended June 30, 2026.

Current wording

Product sales increased by $0.4 million, from $0.1 million for the three months ended September 30, 2025 to $0.5 million for the three months ended September 30, 2026. The increase was primarily driven by a $0.2 million increase in 5G product sales, reflecting continued growth in demand, and a $0.2 million increase in 4G product sales.

Previous 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.

Current wording

Service revenues increased by $0.3 million, from $0.3 million for the three months ended September 30, 2025 to $0.6 million for the three months ended September 30, 2026. The increase was primarily attributable to a $0.5 million increase in 5G service revenue recognized during the third quarter of 2026, partially offset by a $0.2 million decrease in LTE service revenue due to the completion of a service project during the third quarter of 2025.

Previous wording

Cost of net revenues increased by $0.4 million, from $0.8 million for the three months ended June 30, 2025 to $1.2 million for the three months ended June 30, 2026.

Current wording

Cost of net revenues decreased by $0.3 million, from $1.5 million for the three months ended September 30, 2025 to $1.2 million for the three months ended September 30, 2026.

Previous wording

Our gross margin was 32% for the three months ended June 30, 2025. Our gross margin for the three months ended June 30, 2026 is negative and not representative of our expectations regarding profitability of our products and services in future reporting periods.

Current wording

Our gross margin for the three months ended September 30, 2026 and 2025 is negative and not representative of our expectations regarding profitability of our products and services in future reporting periods.

Previous wording

Losses from changes in fair value of convertible promissory notes remained consistent at $0.2 million for each of the three months ended June 30, 2026 and 2025.

Current wording

Research and development expenses remained relatively consistent at $3.3 million for each of the three months ended September 30, 2026 and 2025.

Previous wording

Sales and marketing expenses remained consistent at $2.2 million and $2.1 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Sales and marketing expenses remained relatively consistent at $1.0 million for each of the three months ended September 30, 2026 and 2025.

Previous 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.

Current wording

Foreign currency transactions resulted in a loss of $5.4 million for the three months ended September 30, 2026 and a gain of $1.3 million for the three months ended September 30, 2025. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. During the third quarter of 2025, the South Korean won depreciated against the U.S. dollar, resulting in foreign currency gains, while during the third quarter of 2026, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses.

Previous wording

The change in fair value of common stock warrant liabilities resulted in a loss of $15.4 million for the six months ended June 30, 2026 and a gain of $0.6 million for the six months ended June 30, 2025. For the public warrants, the loss for the six months ended June 30, 2026 was primarily driven by an increase in the quoted market price of our common stock warrants. The gain for the six months ended June 30, 2025 was primarily driven by a decrease in the quoted market price of our common stock warrants. For the private placement warrants, the losses reflected both the increase in quoted market price and changes in the expected volatility assumption used in the Black-Scholes valuation model. The smaller loss recognized during the six months ended June 30, 2026 reflects the greater increase in these valuation inputs relative to the six months ended June 30, 2026.

Current wording

The change in fair value of common stock warrant liabilities resulted in a gain of $6.2 million for the three months ended September 30, 2026 and a loss of $3.8 million for the three months ended September 30, 2025. For the public warrants, the gain for the three months ended September 30, 2026 was primarily driven by a decrease in the quoted market price of our common stock warrants, while the loss for the three months ended September 30, 2025 was primarily driven by an increase in the quoted market price of our common stock warrants. For the private placement warrants, the gain for the three months ended September 30, 2026 was primarily driven by a decrease in the quoted market price of our common stock, partially offset by an increase in the expected volatility assumption used in the Black-Scholes valuation model, while the loss for the three months ended September 30, 2025 was primarily driven by an increase in the expected volatility assumption used in the Black-Scholes valuation model.

Previous 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.

Current wording

Net revenues increased by $1.9 million, from $2.1 million for the nine months ended September 30, 2025 to $4.0 million for the nine months ended September 30, 2026. This change was due to an increase of $0.7 million in product sales and $1.1 million in service revenues.

Previous wording

Service revenues increased by $0.8 million, from $1.2 million for the six months ended June 30, 2025 to $2.0 million for the six months ended June 30, 2026. The increase was due to a $2.0 million increase in 5G service revenue partially offset by a $1.2 million decrease in LTE platform revenue as our service project portfolio shifted to 5G service offering.

Current wording

Service revenues increased by $1.1 million, from $1.5 million for the nine months ended September 30, 2025 to $2.6 million for the nine months ended September 30, 2026. The increase was primarily due to a $2.5 million increase in 5G service revenue, partially offset by a $1.4 million decrease in LTE revenue as our service portfolio shifted to 5G service offering.

Previous wording

Product costs increased by $1.1 million from $0.8 million for the six months ended June 30, 2025 to $1.9 million for the six months ended June 30, 2026. The increase in product costs was primarily attributable to a $0.5 million increase in direct manufacturing costs associated with the ramp-up of 5G production, a $0.3 million increase in depreciation related to 5G mask sets placed into service during the third and fourth quarters of 2025, and a $0.3 million increase in other indirect manufacturing costs.

Current wording

Product costs increased by $0.8 million from $2.2 million for the nine months ended September 30, 2025 to $3.0 million for the nine months ended September 30, 2026. The increase in product costs was primarily attributable to a $1.1 million increase in direct manufacturing and related costs associated with higher sales of 5G products, and a $0.5 million increase in depreciation related to mask sets placed into service since the fourth quarter of 2025. These increases were partially offset by a $0.7 million reduction in inventory write-down charges recorded during the nine months ended September 30, 2025.

Previous 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.

Current wording

Research and development expenses decreased by $1.1 million, from $10.9 million for the nine months ended September 30, 2025 to $9.8 million for the nine months ended September 30, 2026. The decrease primarily reflected a $0.7 million reduction in professional services provided by a third-party vendor, following the completion of a 5G chip development project in the second quarter of 2025, a $0.5 million reduction in project-specific intellectual property expenses, a $0.3 million decrease in chip design software license costs following the discontinuation of certain licenses at the end of 2025 and a $0.3 million decrease in stock-based compensation expense. These decreases were partially offset by a $0.7 million increase in other research and development costs, primarily related to 5G pre-production activities.

Previous 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.

Current wording

Sales and marketing expenses remained relatively consistent at $3.3 million and $3.2 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Foreign currency transactions resulted in a gain of $3.4 million for the six months ended June 30, 2026 and a loss of $3.2 million for the six 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 six months ended June 30, 2025, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses, while during the six months ended June 30, 2026, the South Korean won depreciated against the U.S. dollar, resulting in foreign currency gains.

Current wording

Foreign currency transactions resulted in losses of $2.0 million and $1.9 million for the nine months ended September 30, 2026 and 2025, respectively. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. During each of the nine months ended September 30, 2026 and 2025, the South Korean won appreciated against the U.S. dollar, resulting in foreign currency losses.

Previous wording

The change in fair value of common stock warrant liabilities resulted in a loss of $12.3 million for the three months ended June 30, 2026 and a loss of $1.0 million for the three months ended June 30, 2025. For the public warrants, the losses in both periods were primarily driven by increases in the quoted market price of our common stock warrants. For the private placement warrants, the losses reflected both the increase in quoted market price and changes in the expected volatility assumption used in the Black-Scholes valuation model. The larger loss recognized during the three months ended June 30, 2026 reflects the greater increase in these valuation inputs relative to the three months ended June 30, 2025.

Current wording

The change in fair value of common stock warrant liabilities resulted in losses of $9.2 million and $3.2 million for the nine months ended September 30, 2026 and 2025, respectively. For the public warrants, the losses were primarily driven by an increase in the quoted market price of our common stock warrants. For the private placement warrants, the losses reflected both the increase in quoted market price of our common stock and an increase in the expected volatility assumption used in the Black-Scholes valuation model.

Previous wording

Losses from changes in fair value of convertible promissory notes were $1.5 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively. The increase in expense was primarily attributable to the change in fair value of the Indigo Note recognized prior to its conversion during the first quarter of 2026.

Current wording

Losses from changes in fair value of convertible promissory notes were $1.5 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively. The increase in expense was primarily attributable to a $1.3 million increase in the fair value of the Indigo Notes reflecting the discount on their issuance recognized prior to their conversion into common stock during the first quarter of 2026.

Previous 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.

Current wording

With limited exceptions, we have incurred, and expect to continue to incur, significant operating losses. For the nine months ended September 30, 2026 and 2025, we had a net loss of $37.6 million and $34.4 million, respectively. For the nine months ended September 30, 2026 and 2025, we used $32.5 million and $23.5 million in cash in operating activities, respectively. As of September 30, 2026, we had an accumulated deficit of $639.9 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 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.

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-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 nine months ended September 30, 2026, we received net proceeds of approximately $53.9 million in cash related to the ATM Offering. From April 2025 through September 30, 2026, the Company sold shares of its common stock under the ATM Agreement for gross proceeds of approximately $58.1 million in cash, partially offset by issuance costs of $1.9 million. As of September 30, 2026, approximately $61.9 million of gross proceeds remain available for future issuance under the ATM Agreement.

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. 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.

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 into 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 September 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 September 30, 2026. For the nine months ended September 30, 2026, we incurred penalties of 3% of principal per month on loans in the amount of $1.6 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 September 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 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%.

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 December 2025, we executed an amendment with Anapass, Inc. to extend the maturity date from December 2025 to December 2026 and change the annual interest rate from 6.5% to 7.0%. 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 and change the annual interest rate from 6.5% to 7.0%. 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 September 2026, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in September 2025 with a principal of $10.7 million from September 2026 to September 2027. 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 originally issued to Anapass, Inc. in July 2016 with a principal of KRW 6.0 billion ($4.5 million) 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%. In September 2026, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in September 2022 with a principal of $3.0 million from September 2026 to September 2027. In November 2026, we executed an amendment with Anapass, Inc. to extend the maturity date of the term loan originally entered into in May 2022 with a principal of $2.2 million from November 2026 to November 2027.

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 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.

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 nine months ended September 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 nine months ended September 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 September 30, 2026.

Previous wording

In March 2026, we entered into a convertible promissory note purchase agreement with Obsidian Global GP, LLC (“Obsidian”), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate (“Obsidian Notes” or “Obsidian Facility”). Through June 30, 2026, no Obsidian Notes have been issued.

Current wording

In March 2026, we entered into a convertible promissory note purchase agreement with Obsidian Global GP, LLC (“Obsidian”), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate (“Obsidian Notes” or “Obsidian Facility”). As of September 30, 2026, no Obsidian Notes have been issued.

Previous 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.

Current wording

As of September 30, 2026, our existing sources of liquidity include $17.2 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 September 30, 2026, we have borrowings with a total principal amount of $52.4 million, which are contractually due within 12 months from this Quarterly Report. In addition, we have borrowings with a total principal amount of $2.2 million and a convertible promissory note with a principal amount of $5.0 million, which are contractually due between one and two 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 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. From April 2025 through September 30, 2026, the Company sold shares of its common stock under the ATM Agreement for gross proceeds of approximately $58.1 million in cash, partially offset by issuance costs of $1.9 million. As of September 30, 2026, approximately $61.9 million of gross proceeds remain available for future issuance under the ATM Agreement.

Previous wording

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

Current wording

Cash Flow Comparison for the Nine Months Ended September 30, 2026 and 2025

Previous 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.

Current wording

During the nine months ended September 30, 2026 and 2025, we funded our operations primarily through financing activities. For the nine months ended September 30, 2026, such activities consisted primarily of proceeds from sales of common stock. For the nine months ended September 30, 2025, such activities consisted primarily of proceeds from sales of common stock and borrowings from related parties. 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 $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.

Current wording

Cash used in operating activities of $32.5 million during the nine months ended September 30, 2026, was primarily attributable to our net loss of $37.6 million and a net change in our operating assets and liabilities of $10.5 million, partially offset by non-cash adjustments of $15.6 million. Non-cash adjustments consisted primarily of a $9.2 million loss from the change in fair value of warrant liabilities, an increase of $1.6 million in provision for credit losses, a $1.5 million loss from the change in fair value of convertible promissory notes, $1.1 million in stock-based compensation, $0.9 million in depreciation and amortization charges, $0.5 million in amortization of operating lease right-of-use assets, $0.5 million in write-off of contract 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 $10.5 million primarily resulted from an increase of $6.5 million in prepaid expenses and other current assets, a decrease of $2.6 million in accrued and other current liabilities, an increase of $2.4 million in inventory, a decrease of $0.5 million in lease liabilities, and a decrease of $0.4 million in accounts payable partially offset by a decrease of $0.8 million in contract assets, a decrease of $0.5 million in accounts receivable, an increase of $0.3 million in net defined benefit liabilities, and an increase of $0.3 million in other liabilities.

Previous 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.

Current 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 other taxes payable, and a decrease of $0.2 million in other liabilities.

Previous 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.

Current wording

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

Previous 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.

Current wording

Cash provided by financing activities of $52.1 million during the nine months ended September 30, 2026, primarily consisted of $55.8 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 $4.8 million repayment of our borrowings and a $1.9 million payment of common stock issuance costs.

Previous 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.

Current wording

Cash provided by financing activities of $31.1 million during the nine months ended September 30, 2025 primarily 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 ATM Agreement, partially offset by a $2.2 million repayment of our borrowings and a $1.2 million payment of common stock issuance costs.

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 Quarterly Report 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. 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

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.

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 $5.6 million and $4.0 million as of September 30, 2026 and December 31, 2025, respectively.

Previous 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.

Current wording

Our EGC status commenced upon the completion of the initial public offering of Concord Acquisition Corp III, our predecessor, in November 2021, and is expected to expire in the fourth quarter of 2026.