Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements as of and for the years ended December 31, 2025 and 2024, and related notes included in this Annual Report on Form 10-K (the “Annual Report”). This discussion may contain forward-looking statements, including, but not limited to, our expectations or predictions of future financial or business performance or conditions. Forward-looking statements are inherently subject to risks, uncertainties, and assumptions. You should read the sections in this Annual Report titled “Risk Factors” and “Special Note of Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by these forward-looking statements. Unless otherwise indicated, the terms “GCT,” “the Company,” “we,” “us,” or “our” refer to GCT Semiconductor Holding Inc., a Delaware corporation, together with our consolidated subsidiaries.
Overview
We are a fabless semiconductor company that specializes in the design, manufacturing, and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers (“RF”) and modems, which are essential for a wide variety of industrial, business-to-business (“B2B”) and consumer applications. We have successfully developed and supplied communication semiconductor chipsets and modules to leading wireless operators worldwide, as well as to original design manufacturers (“ODMs”) and original equipment manufacturers (“OEMs”) for portable wireless routers (e.g., Mobile Router (“MiFi”)), indoor and outdoor fixed wireless routers (e.g., customer premise equipment (“CPE”)), industrial machine-to-machine (“M2M”) applications and smartphones.
We oversee sales, marketing, and accounting operations from our headquarters in San Jose, California. The Company conducts product design, development, and customer support through our wholly owned subsidiaries located in South Korea, one of which serves as our research and development center. In addition, we utilize separate sales offices for local technical support and sales in Taiwan, China, and Japan.
Our current product portfolio includes RF and modem chipsets based on 4th generation (“4G”), known as Long Term Evolution (“LTE”), technology offering a variety of chipsets differentiated by speed and functionality. These include 4G LTE, 4.5G LTE Advanced (twice the speed of LTE), and 4.75G LTE Advanced-Pro (four times the speed of LTE) chipsets. The Company also develops and sells cellular Internet of Things (“IoT”) chipsets for low-speed mobile networks such as eMTC/NB- IOT/Sigfox, and other network protocols. 5G chipset added to portfolio recently with commercial shipments in the fourth fiscal quarter of 2025.
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.
Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, and the issuance of capital stock.
Key Factors Affecting Our Performance
We believe that our future success and financial performance depend on a number of factors that present significant opportunities for our business but also pose risks and challenges, including those in the section titled “Risk Factors” of this Annual Report.
Commercial Deployment of 4G LTE and 5G Market
Our business depends upon the continued commercial deployment of 4G and 5G wireless communications equipment, products, and services based on GCT’s technology. Deployment of new networks by wireless carriers requires significant capital expenditures well in advance of any revenue from such networks. If the rate of deployment of new networks by wireless carriers is slower than our expectation, this will reduce the sales of 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
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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.
Development of New Products
The markets in which we and our customers compete or plan to compete are characterized by rapidly changing technologies, industry standards, and technological obsolescence. Our ability to compete successfully depends on our ability to design, develop, market, and support new products and enhancements on a timely and cost-effective basis. A fundamental shift in technologies in any of our target markets, such as the 5G wireless communications markets, could harm our competitive position within these markets. Our failure to anticipate these shifts, develop new technologies, or react to changes in existing technologies could delay our development of new products, which could result in product obsolescence, decreased revenue, and loss of design wins.
The success of our new products will depend on accurate forecasts of long-term market demand, customer and consumer requirements, and future technological developments, as well as a variety of specific implementation factors, including:
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accurate prediction of the size and growth of the 4G and 5G markets;
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accurate prediction of the growth of the IoT markets and the timing of commercial availability of 4G and 5G networks;
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accurate prediction of changes in device manufacturer requirements, technology, industry standards or consumer expectations, demands, and preferences;
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timely and efficient completion of product design and transfer to manufacturing, assembly and test, and securing sufficient manufacturing capacity to allow us to continue to timely and efficiently deliver products to our customers;
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market acceptance, adequate consumer demand, and commercial production of the products in which our mobile and wireless broadband semiconductor solutions are incorporated;
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the quality, performance, and reliability of the product as compared to competing products and technologies;
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effective marketing, sales, and service; and
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the ability to obtain licenses to use third-party technology to support the development of our products.
If we fail to introduce new products that meet the demands of our customers or our target markets, or if we fail to penetrate new markets, our revenue will likely decrease over time, and our financial condition could suffer.
Semiconductor and Communications Industry
The semiconductor industry has historically exhibited a pattern of cyclicality, which at various times has included significant downturns in customer demand. Cyclical downturns can result in substantial declines in semiconductor demand, production overcapacity, high inventory levels, and accelerated erosion of average selling prices. Such downturns result from a variety of market forces, including constant and rapid technological change, quick product obsolescence, price erosion, evolving standards, short product life cycles, and wide fluctuations in product supply and demand.
Recent downturns in the semiconductor industry have been attributed to a variety of factors, including global macroeconomic uncertainty, global/regional pandemic (i.e., SARS, COVID-19), trade and geopolitical tensions including tariffs, weakness in end-market demand and pricing across semiconductor applications, and excess inventory levels. In recent periods, portions of the semiconductor industry have experienced downturns driven by inventory corrections and reduced demand in certain end markets, while other segments have experienced increased investment and growth. These mixed industry conditions have impacted our business, as well as our suppliers, distributors, and end customers.
Because a significant portion of our expenses are fixed in the near term or are incurred in advance of anticipated sales, we may not be able to reduce our expenses rapidly enough to offset any unanticipated shortfall in revenue. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In addition, the semiconductor industry has periodically experienced increased demand and production constraints. As a fabless semiconductor company, we rely exclusively on third-party foundries, including certain major semiconductor foundries such as United Microelectronics Corporation, Samsung and Taiwan 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.
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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.
In the past, the wireless communications industry has experienced pronounced downturns, and these cycles may continue in the future. A future decline in global economic conditions could have adverse, wide-ranging effects on demand for our products and for the products of our customers, particularly wireless communications equipment manufacturers or other members of the wireless industry, such as wireless network operators. Inflation, deflation, and economic recessions that adversely affect the global economy and capital markets also adversely affect our customers and our end consumers. For example, our customers’ ability to purchase or pay for our products and services, obtain financing, and upgrade wireless networks could be adversely affected, which may lead to many networking equipment providers slowing their research and development activities, canceling, or delaying new product development, reducing their inventories, and taking a cautious approach to acquiring our products, which would have a significant negative impact on our business. If this situation were to occur, it could adversely affect our operating results, cash flow, and financial condition. In the future, any of these trends may also cause our operating results to fluctuate significantly from year to year, which may increase the volatility of our stock price.
Business Combination
On March 26, 2024 (the “Closing Date”), Concord Acquisition Corp III (“Concord III”), a Delaware corporation, consummated a series of transactions that resulted in the combination of Gibraltar Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Concord III (“Merger Sub”), and GCT Semiconductor, Inc. (“Legacy GCT”), pursuant to a Business Combination Agreement, dated November 2, 2023 (the “Business Combination Agreement”), by and among Concord III, Merger Sub and Legacy GCT. Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy GCT, with Legacy GCT surviving the merger as a wholly-owned subsidiary of Concord III (the “Business Combination”). On the Closing Date, Concord III changed its name from Concord III to “GCT Semiconductor Holding, Inc.”
The Business Combination was accounted for as a reverse recapitalization, with Legacy GCT being the accounting acquirer and Concord III being the acquired company for financial reporting purposes. As a result, Legacy GCT’s consolidated financial statements for historical periods will be included in GCT’s future periodic reports filed with the SEC.
The Company received $17.2 million cash proceeds from the Business Combination and private investment from public equity financing (“PIPE Financing”), net of transaction costs. Total direct and incremental transaction costs of Concord III and Legacy GCT were $22.0 million and treated as a reduction of the cash proceeds, of which $8.9 million was deducted from additional paid-in capital for underwriting, accounting, legal and other fees, and the remaining balance of $13.1 million was expensed in the period incurred by Concord III. The Company utilized the proceeds from the Business Combination and PIPE Financing to finance its operations in 2024.
Key Components of Results of Operations
Net Revenues
The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Our net revenues are comprised of product and service revenues.
Product Revenues
Our product sales are generated from the sale of mobile semiconductor products. Product revenues are recognized at a point in time once control has been transferred to a customer, which is generally at the time of shipment.
Service Revenues
Our service revenues are generated from the sale of mobile semiconductor platform solutions aimed at the 4G LTE and 5G industries, development services, technical advice, and maintenance services. Service revenues are generally recognized over time as the customer obtains control of the promised services.
Cost of Net Revenues
Our cost of net revenues consists of product and service costs. The cost of product net revenues consists of direct and indirect costs related to the manufacturing of our products. Direct costs include wafer costs and costs of assembly and testing performed by third-party contract manufacturers. Indirect costs consist of provisions for excess, slow moving and obsolete inventory, royalties, allocated overhead for employee costs and facility costs, warranty, and the amortization of our production mask sets and certain intangible assets. Shipping
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and handling costs incurred for inventory purchases related to the units sold and costs of product shipments are also recorded in the cost of net product revenues. Service costs consist of non-recurring engineering costs for service projects.
Operating Expenses
Research and Development Expenses
Our research and development (“R&D”) expenses consist of costs incurred to develop our products and services. These expenses consist of personnel costs, including salaries, employee benefit costs, and stock-based compensation for employees engaged in R&D activities, software costs, computing costs, hardware and experimental supplies, and expenses for outside engineering consultants. We expense all R&D costs in the periods in which they are incurred.
Sales and Marketing Expenses
Our sales and marketing (“S&M”) expenses consist of employee-related expenses, including salaries, commissions, employee benefits costs, and stock-based compensation for all marketing, sales, and sales support employees. S&M expenses also include local and centralized advertising costs and the infrastructure required to support our marketing efforts. We expense S&M costs in the periods in which they are incurred.
General and Administrative Expenses
Our general and administrative (“G&A”) expenses consist of various components not related to R&D or S&M, such as personnel costs, regulatory fees, costs associated with maintaining and filing intellectual property, meals and entertainment expenses, travel expenses, insurance expenses, and other expenditures related to external professional services including legal, engineering, marketing, human resources, audit, and accounting services. Personnel costs include salaries, benefits, and stock-based compensation. As we continue to grow and expand our workforce and operations, and considering the increased costs associated with operating as a public company, we anticipate that our G&A expenses will increase for the foreseeable future.
Gain on Extinguishment of Liability
Gain on extinguishment of liability relates to the release by a vendor due to a contract termination during the period of amounts payable by us for R&D services received in prior years.
Other Income (Expense)
Interest Expense
Interest expense primarily consists of interest and amortization of related debt issuance costs related to our borrowings and convertible promissory notes.
Gain (loss) on foreign currency transactions, net
Gain (loss) on foreign currency transactions consists of gains or losses, presented on a net basis, from transactions denominated in other currencies, primarily South Korean won.
Change in fair value of common stock warrant liabilities
Common stock warrants are classified as liabilities if they do not meet equity classification requirements based on their settlement mechanism upon a change of control and similar transactions. The corresponding liability is remeasured at fair value while the common stock warrants remain outstanding.
Change in fair value of convertible promissory notes
Change in fair value of convertible promissory notes includes measurement gains and losses related to the outstanding convertible promissory notes that are accounted for under the fair value option.
Change in fair value of common stock forward liability
Common stock forward liability represents a freestanding common stock forward contract under the purchase agreement (“Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”) executed in April 2024, which contains a variable share forward on our common stock. This freestanding instrument is precluded from equity classification since the Purchase Agreement with B. Riley requires shareholder approval for the issuance of shares in excess of the applicable ownership limitation caps, which is not an input in a fixed-for-fixed option or forward on equity shares. The fair value of this liability reflects the probability-adjusted present value of the discount to be provided to B. Riley for sales of our common stock under the Purchase Agreement, relative to the volume-weighted average price of our common stock during the applicable pricing period. Change in fair value of common stock forward liability includes measurement gains and losses driven by the change in the probability of scenarios to sell certain number of shares under the Purchase
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Agreement.
Results of Operations
This section discusses the results of our operations for the periods indicated. The period-to-period comparison of financial results is not necessarily indicative of future results.
For the Years Ended December 31, 2025 and 2024
The following table sets forth our historical results for the periods indicated and the changes between periods (in thousands):
Year Ended December 31,
Net revenues:
Cost of net revenues:
Operating expenses:
Loss on impairment of long-lived assets — 787 (787 ) (100 )%
Gain (loss) on foreign currency transactions, net (784 ) 4,690 (5,474 ) (117 )%
Change in fair value of common stock forward liability 312 (586 ) 898 (153 )%
Net Revenues
Net revenues decreased by $6.3 million, or 69%, from $9.1 million for the year ended December 31, 2024 to $2.9 million for the year ended December 31, 2025. This change was due to a decrease of $3.6 million in product sales and a decrease of $2.6 million in service revenues.
Product sales decreased by $3.6 million, or 76%, from $4.8 million for the year ended December 31, 2024 to $1.1 million for the year ended December 31, 2025. The sales of our 5G platforms contributed $3.9 million to our product sales during the year ended December 31, 2024, and there were no 5G platform sales during the year ended December 31, 2025.
Service revenues decreased by $2.6 million, or 60%, from $4.4 million for the year ended December 31, 2024 to $1.7 million for the year ended December 31, 2025. This decrease was attributed to the substantial completion of a significant service project during the year ended December 31, 2024. Our service project portfolio during the year ended December 31, 2025 was less extensive resulting in lower service revenues.
Cost of Net Revenues
Cost of net revenues increased by $0.6 million, or 16%, from $4.1 million for the year ended December 31, 2024 to $4.7 million for the year ended December 31, 2025.
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Product costs increased by $1.5 million, or 60%, from $2.5 million for the year ended December 31, 2024 to $4.0 million for the year ended December 31, 2025. This increase in product costs was primarily driven by additional production overhead costs of $1.0 million, a $0.7 million increase in charges related to slow-moving inventory reserve, and a $0.2 million increase in depreciation charges compared to the year ended December 31, 2024. These increases were partially offset by a $0.4 million decrease related to 5G platform costs due to the lack of sales during the year ended December 31, 2025.
Service costs decreased by $0.9 million, or 57%, from $1.5 million for the year ended December 31, 2024 to $0.7 million for the year ended December 31, 2025. This decrease in service costs was commensurate with the level of our service project activity.
Our gross margin for the year ended December 31, 2024 was 56%. Our gross margin for the year ended December 31, 2025 is negative and not representative of our expectations regarding profitability of our products and services in future reporting periods. In 2025, we experienced lower product revenue, which was not sufficient to fully absorb production overheads. We expect operational efficiencies to improve when our 5G product sales start contributing more significantly to our overall revenue, which is expected later in 2026, following the commercial launch of our 5G chipset in the fourth quarter of 2025.
Research and Development Expenses
Research and development expenses decreased by $3.3 million, or 19% from $17.3 million for the year ended December 31, 2024 to $14.0 million for the year ended December 31, 2025. This change was primarily driven by the completion of a 5G chip design project, which led to a $3.3 million reduction in professional services from Alpha, and a $1.6 million decrease in the project-specific intellectual property expenses incurred in 2024. This reduction was partially offset by a $0.9 million increase in personnel-related costs due to an increase in our headcount, a $0.3 million increase in stock-based compensation expense due to issuance and vesting of share-based awards, and a $0.4 million increase in pre-production and engineering supplies related to our 5G initiatives.
Sales and Marketing Expenses
Sales and marketing expenses remained relatively consistent at $4.2 million and $3.9 million for the years ended December 31, 2025 and 2024, respectively.
General and Administrative Expenses
General and administrative expenses increased by $5.7 million, or 53%, from $10.8 million for the year ended December 31, 2024 to $16.5 million for the year ended December 31, 2025 due to the following key drivers:
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Changes in our expected credit loss estimates for receivables resulted in a $0.4 million gain in the year ended December 31, 2024, compared to a $2.8 million loss in the year ended December 31, 2025, resulting in a $3.2 million net increase to general and administrative expenses for 2025.
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Stock-based compensation expense increased by $3.2 million from $2.0 million for the year ended December 31, 2024 to $5.2 million for the year ended December 31, 2025. The increase was primarily due to the issuance of the equity-classified common stock warrants to compensate certain investors with a fair value of $4.0 million in the year ended December 31, 2025, compared to $0.9 million in charges recognized related to the vesting of the founder shares recognized upon consummation of the Business Combination during the year ended December 31, 2024.
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Personnel-related costs increased by $0.6 million during the year ended December 31, 2025 due to the increased headcount and merit-based salary adjustments.
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These increases were partially offset by a $1.2 million decrease in professional services and other costs during the year ended December 31, 2025 compared to the year ended December 31, 2024, driven by lower transactional activity during this period.
Gain on Extinguishment of Liability
Gain on extinguishment of liability was $14.6 million for the year ended December 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 December 31, 2025.
Loss on Impairment of Long-Lived Assets
Loss on impairment of intangible assets was $0.8 million for the year ended December 31, 2024 due to impairment charges for certain long-lived assets that were determined to be not recoverable. No impairment charges were recorded for the year ended December 31, 2025.
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Interest Expense
Interest expense increased by $2.2 million, or 56%, from $3.9 million for the year ended December 31, 2024 to $6.0 million for the year ended December 31, 2025. The increase was primarily due to the increase in outstanding debt.
Gain (Loss) on Foreign Currency Transactions, net
Foreign currency transactions resulted in a loss of $0.8 million for the year ended December 31, 2025 and a gain of $4.7 million for the year ended December 31, 2024. The primary factor behind these fluctuations is our term loans portfolio, which is largely denominated in the South Korean won. The loss in the year ended December 31, 2025 was driven by the depreciation of the U.S. dollar against the South Korean won, while the gain in the year ended December 31, 2024 was attributable to the appreciation of the U.S. dollar against the South Korean won.
Change in Fair Value of Common Stock Warrant Liabilities
The change in fair value of common stock warrant liabilities resulted in a $0.9 million gain for the year ended December 31, 2025 and a $2.2 million gain for the year ended December 31, 2024. These gains was primarily driven by changes in the fair value of our common stock during the respective periods.
Change in Fair Value of Convertible Promissory Notes
Losses from changes in fair value of convertible promissory notes were $0.3 million and $1.5 million for the years ended December 31, 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 during the year ended December 31, 2025.
Change in Fair Value of Common Stock Forward Liability
The change in fair value of common stock forward liability resulted in a gain of $0.3 million for the year ended December 31, 2025 and a loss of $0.6 million for the year ended December 31, 2024. The decrease in the fair value of the underlying liability of $0.3 million for the year ended December 31, 2025 was based on our expectations related to the utilization of the available commitment under the common stock purchase agreement with B. Riley. The increase in fair value of common stock forward liability of $0.6 million for the year ended December 31, 2024 was due to the initial recognition of this financial instrument based on our assumptions at the inception of this arrangement.
Liquidity and Capital Resources
Since inception, we have financed our operations primarily through cash receipts from customers, the issuance of convertible promissory notes, borrowings, the issuance of capital stock, and the exercise of stock options.
With limited exceptions, we have incurred, and expect to continue to incur, significant operating losses. For the years ended December 31, 2025 and 2024, we had a net loss of $43.4 million and $12.4 million, respectively, and used cash in operating activities of $30.7 million and $31.0 million, respectively. As of December 31, 2025 and 2024, we had an accumulated deficit of $605.4 million and $562.0 million, respectively. Our 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.
Business Combination and PIPE Financing
In March 2024, we received $17.2 million in cash proceeds from the reverse recapitalization and PIPE Financing, net of transaction costs in connection with the closing of the Business Combination. 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 December 31, 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, after B. Riley withheld $1.0 million against the outstanding amounts payable. We have not sold any shares since April 2025, due to restrictions of the at market issuance agreement discussed below.
At-Market Offering
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
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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 twelve months ended December 31, 2025, we received net proceeds of approximately $2.2 million in cash related to the ATM Offering.
Registered Direct Offering
In May 2025, we entered into securities purchase agreements with certain institutional investors to execute a registered direct offering (“RDO”), pursuant to which we sold an aggregate of 7,006,370 shares of our common stock and warrants to purchase up to 10,509,555 shares of common stock at a combined purchase price of $1.57 per share and warrant, for aggregate gross proceeds of approximately $11.0 million. The warrants have an exercise price of $1.71 per share, will be exercisable six months from issuance, and will expire five years from the initial date of exercise. The RDO closed on May 16, 2025 and we received net proceeds of $9.9 million in cash.
Related Party Borrowings from Dr. Kyeongho Lee and Anapass, Inc.
In November and December 2024, we entered into term loan agreements with Dr. Kyeongho Lee (“Dr. Lee”), the chairman of our board of directors, pursuant to which we borrowed $2.9 million and $2.1 million, maturing in December 2024 and January 2025, respectively. In October 2025, we partially repaid to Dr. Lee $1.4 million of the term loans originally entered into in December 2024. The term loan entered into in November 2024 and the remainder of the term loans originally entered into in December 2024 are outstanding as of December 31, 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 December 31, 2025. For the year ended December 31, 2025, we incurred penalties of 3% of principal per month on loans in the amount of $2.9 million that are past their maturity dates, calculated daily until the principal and accrued interest are paid, No penalties were incurred for the year ended December 31, 2024. Outstanding penalties payable to Kyeongho Lee as of December 31, 2025 are $2.5 million.
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.
During the year ended December 31, 2025, we renegotiated the payment terms for some obligations, including loan agreements with i Best Investment Co., Ltd, Mujin Electronics Co., Ltd, KEB Hana Bank, IBK Industrial Bank, Dr. Lee, and Anapass, Inc., which were initially due in 2025. We remain dependent on related-party debt financing to fund our operations, including loans from Anapass Inc. and Dr. Lee.
Indigo Notes
In December 2025, we entered into a convertible promissory note purchase agreement with Indigo Capital LP (“Indigo”), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate (“Indigo Notes”). Each Indigo Note will be issued at a purchase price equal to 93% of its principal amount and matures 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 90% of the reference price, which is calculated as the lowest volume-weighted average price (“VWAP”) of our common stock over the three trading days prior to the submission of a conversion notice by Indigo. The reference price is subject to a floor of 96% of the average VWAP during this three-day period. No interest is payable on the Indigo Notes, and we have an optional redemption right beginning 12 months following the issuance of the Indigo Notes. Redemption between 12 and 18 months from issuance carries a premium of 7% on the principal amount redeemed, increasing to 14% if redeemed between 18 months and prior to maturity. 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 based on the discount upon issuance. In December 2025, the first Indigo Note was converted into 903,710 shares of our common stock. As of December 31, 2025, the outstanding principal amount of the Indigo Notes was $1.0 million with a fair value of $1.1 million. In January 2026, the second Indigo Note was converted into 979,817 shares of our common stock.
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Additional Liquidity Needs
We expect significant ongoing operating expenditures to be necessary to successfully implement our business plan and market our products. Having production shipments of our 5G products in the fourth quarter of 2025, we anticipate continued significant related expenditures, including production-related costs such as mask sets, wafers, and assembly and test costs, and most of these costs will be incurred prior to the commencement of manufacturing and production.
As of December 31, 2025, our existing sources of liquidity include cash and cash equivalents of $0.6 million. 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), sales under the ELOC (subject to conditions and limitations), 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 December 31, 2025, we have borrowings with a total principal amount of $56.6 million, which are contractually due within 12 months from this Annual Report. We will need to start generating positive cash flows, renegotiate our existing debt obligations and raise additional capital through debt or equity financing. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to us or at all.
If we do not have sufficient funds to make such payments, or if we cannot extend the terms of our existing commercial loans or to raise additional capital through equity or debt offerings, the payments can be delayed, which may adversely affect our business operations and financial performance. While we believe we will be able to secure additional capital and funding in the next 12 months to sustain our operations, the report of our independent registered accounting firm included in this Form 10-K includes a paragraph expressing substantial doubt about our ability to continue as a going concern. For a more detailed description of such risks, please see the section entitled “Risk Factors” disclosed in this Annual Report on Form 10-K.
We intend to mitigate the risk of a working capital deficit by continuing to pursue 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 addition, we recently 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. Following the completion of the RDO and through the date of this Annual Report, the Company has $94.0 million of remaining equity funding capacity available under its shelf registration statement. We have historically been able to raise capital through the issuance and sale of equity and equity-linked instruments, such as redeemable convertible preferred stock, convertible promissory notes, and borrowings, although no assurance can be provided that we would continue to be successful in doing so in the future.
We expect to use additional liquidity and our available cash and cash equivalents to finance the following activities:
•
Cost of mass production of 5G and other products, including masks, wafers, and design house fees;
•
Acquisition of IP and tool enhancement to develop the next generation of product;
•
Hiring of additional personnel in engineering, sales, and marketing functions; and
•
Improvement of engineering equipment.
While we believe we have a reasonable basis for our expectations and will be able to raise additional funds, we cannot provide assurance that we will be able to complete additional financing in a timely manner. In addition, the sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financial covenants that would restrict our operations. We cannot be certain that any financing will be available in the amounts we need or on terms acceptable to us, if at all. Should we enter into definitive collaboration and/or joint venture agreements or engage in business combinations in the future, we may be required to seek additional financing.
Cash Flow Comparison for the Years Ended December 31, 2025 and 2024
The following table summarizes our cash flows for the periods indicated (in thousands):
Year Ended December 31,
Net cash used in operating activities $ (30,675 ) $ (30,957 )
Net cash used in investing activities (2,411 ) (542 )
Net cash provided by financing activities 32,246 36,473
Effect of exchange rate changes on cash and cash equivalents (5 ) (3,797 )
Net increase (decrease) in cash and cash equivalents $ (845 ) $ 1,177
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Overview of Cash Flows
During the year ended December 31, 2025 and 2024, we funded our operations primarily through financing activities. This included proceeds from the reverse recapitalization and concurrent PIPE financing completed in March 2024, as well as from the issuance of convertible promissory notes to third parties and term loans from related parties in 2024 and 2025. We remain dependent on cash inflows from financing activities to fund our operating expenses. The repayment of the outstanding loan portfolio will require a combination of cash generated from future operations, additional financing activities, and renegotiation of maturity dates. We are continuously evaluating our capital structure and cash flow projections as we work towards meeting our debt obligations and other liabilities.
Operating Activities
Cash used in operating activities of $30.7 million during the year ended December 31, 2025 was primarily attributable to our net loss of $43.4 million, partially reduced by non-cash adjustments of $9.7 million, and further reduced by net changes in our operating assets and liabilities of $3.0 million. Non-cash adjustments consisted primarily of a $6.3 million in stock-based compensation, a $2.8 million increase in provision for credit losses, $0.7 million in amortization of operating lease right-of-use assets, $0.7 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 $0.9 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 $3.0 million primarily resulted from a decrease of $2.0 million in inventory primarily due to inventory write downs, an increase of $1.2 million in accrued and other current liabilities, an increase of $0.5 million in net defined benefit liabilities, a decrease of $0.3 million in accounts receivable, a $0.2 million decrease in prepaid expenses and other current assets and a $0.1 million decrease in other assets. These changes were partially offset by a decrease of $0.9 million in lease liabilities, a decrease of $0.4 million in accounts payable, an increase of $0.3 million in contract assets, a increase of $0.2 million in other liabilities.
Cash used in operating activities of $31.0 million during the year ended December 31, 2024 was primarily attributable to our net loss of $12.4 million, non-cash adjustments of $9.7 million, and a net change in our operating assets and liabilities of $8.8 million. Non-cash adjustments consisted primarily of a $14.6 million gain from the extinguishment of liability, a $2.2 million gain from the change in fair value of warrant liabilities, a $0.4 million decrease in provision for credit loss, partially offset by $2.7 million in stock-based compensation, a $1.5 million loss from the change in fair value of convertible promissory notes, $0.8 million of impairment of certain long-lived assets that were determined to be not recoverable, $0.7 million in non-cash expense related to the issuance of common stock to an underwriter, $0.7 million in depreciation and amortization charges, a $0.6 million in operating lease right-of-use amortization, and a $0.6 million loss from the initial recognition of the common stock forward liability. The change in our operating assets and liabilities of $8.8 million primarily resulted from a decrease of $3.2 million in accrued and other current liabilities primarily due to the payment of costs incurred related to our Business Combination, a decrease of $2.6 million in accounts payable, an increase of $1.7 million in contract assets, an increase of $1.5 million in inventory, a decrease of $0.6 million in lease liabilities, an increase of $0.3 million in accounts receivable, an increase of $0.3 million in other assets and a decrease of $0.2 million in other liabilities. These changes were partially offset by a decrease of $1.1 million in prepaid expenses and other current assets, an increase of $0.5 million in net defined benefit liabilities, and an increase of $0.1 million in other taxes payable.
Investing Activities
Cash used in investing activities during the years ended December 31, 2025 and 2024 was related solely to the purchases of property and equipment.
Financing Activities
Cash provided by financing activities of $32.2 million during the year ended December 31, 2025 consisted of $21.8 million in proceeds from borrowings, $11.0 million gross proceeds received from the issuance of common stock in a registered direct offering, $2.3 million in proceeds from the issuance of common stock under the at-market agreement and $1.9 million in proceeds from issuance of convertible promissory notes. These financing inflows were partially offset by $3.7 million in repayment of our bank borrowings, and $1.2 million payment of common stock issuance costs.
Cash provided by financing activities of $36.5 million during the year ended December 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, $11.9 million in proceeds from borrowings, $8.5 million proceeds received from issuance of common stock to B. Riley under the Purchase Agreement, and $2.2 million proceeds received from issuance of common stock in a private placement. These financing inflows were partially offset by $14.1 million in repayment of our borrowings and $5.6 million repayment of convertible promissory notes.
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Commitments and Contractual Obligations
We have material commitments and contractual obligations, including leases, purchase commitments, and research and development agreements. We have various operating leases, under which we lease office equipment and office space. The operating leases have various expiration dates through 2028.
We have certain commitments for outstanding purchase orders related to the manufacture of certain wafers utilized by the Company and other services, and we have entered into a material research and development agreement. See Note 8 to our consolidated financial statements included in this Form 10-K for more information regarding our additional commitments and contractual obligations.
We have certain debt agreements in place related to convertible promissory notes and borrowings. See Note 7 to our consolidated financial statements included in this Form 10-K for more information regarding our debt arrangements.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and related disclosures. We base our estimates on historical experience and other factors we believe are reasonable under the circumstances, which form the basis for judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions due to inherent uncertainty in making them, and any such differences may be material.
Revenue Recognition
Our revenues are generated from the sale of mobile semiconductor solutions, including products and platform solutions for the LTE and 5G industries, as well as development services and technical advice and maintenance services.
The timing of revenue recognition and the amount of revenue recognized in each case depends on various factors, including the specific terms of each arrangement and the nature of the underlying performance obligations. Revenues from sales of our products are recognized upon transfer of control to the customer, which is generally at the time of shipment. Service revenues from development services, technical advice, and maintenance services are generally recognized over time as these performance obligations are satisfied.
We estimate potential future returns and sales allowances related to current-period product revenue. We analyze historical return rates and changes in customer demand when evaluating the adequacy of returns and sales allowances. Although we believe we have a reasonable basis for our estimates, such estimates may differ from actual returns and sales allowances. These differences may materially impact reported net product revenues and amounts ultimately collected on accounts receivable.
Provision for Credit Losses
Accounts receivable balances are primarily derived from revenues earned from customers located in the United States, China, South Korea, Japan, and Taiwan. We perform ongoing credit evaluations of the financial conditions of our customers and distributors, and generally do not require collateral from our customers. We continuously monitor collections and payments from customers and maintain a provision for credit losses based upon the collectibility of our customer accounts. We review the provision by considering certain 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 $4.0 million and $1.2 million as of December 31, 2025 and December 31, 2024, respectively.
Fair Value of Convertible Promissory Notes
We have made an election to account for certain promissory notes under the fair value option, the convertible promissory notes are recorded at their initial fair value on the date of issuance and then are adjusted to fair value upon any modification and at each balance sheet date thereafter. Changes in the estimated fair value of the convertible promissory notes are recognized as non-cash gains or losses in the consolidated statements of operations within other income (expenses), net.
Our convertible promissory notes are valued using a discounted cash flow (“DCF”) model or a binomial lattice model (“BLM”), both of which are Level 3 fair value measurements. Significant assumptions used in the DCF include the remaining term and discount rate. Significant assumptions used in the BLM include volatility, remaining term, risk-free rate, and credit spread.
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Contracts in Own Equity – Fair Value of Liability-Classified Warrants
We classify share-settled contracts, including warrants to purchase shares of the Company’s common stock, that do not meet the indexation guidance as liabilities. At the end of each reporting period, these liability-classified instruments are remeasured using an option-pricing model or the BLM. Significant assumptions are used in determining the fair value of our warrants and include volatility and the risk-free rate.
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements included herein for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one yet, of their potential impact on our financial condition and results of operations.
JOBS Act Accounting and Emerging Growth Company Elections
We are an “emerging growth company (“EGC”),” as defined in the JOBS Act. Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued after the enactment of the JOBS Act until those standards apply to private companies.
We have elected to use this extended transition period for complying with certain new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our consolidated financial statements may or may not be comparable to companies that comply with new or revised accounting pronouncements as of the public companies’ effective dates.
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.
Smaller Reporting Company Status
We are also a “smaller reporting company,” as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We have elected to take advantage of certain of the scaled disclosures available to smaller reporting companies, and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our voting and non-voting common stock held by non- affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a “smaller reporting company”, as defined by Rule 12b-2 of the Securities and Exchange Act of 1934, as amended (the Exchange Act), and in Item 10(f)(1) of Regulation S-K, and are not required to provide the information otherwise required under this item.
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Item 8. Financial Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: 207) 47
Consolidated Financial Statements:
Consolidated Balance Sheets 48
Consolidated Statements of Operations 49
Consolidated Statements of Comprehensive Loss 50
Consolidated Statements of Stockholders’ Deficit 51
Consolidated Statements of Cash Flows 52
Notes to Consolidated Financial Statements 53
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
of GCT Semiconductor Holding, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of GCT Semiconductor Holding, Inc. (a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the periods ended December 31, 2025 and 2024, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company’s recurring losses from operations, available cash and cash used in operations raise substantial doubt about the Company’s ability to continue as a going concern. Management’s evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ BPM LLP
We have served as the Company's auditor since 2024.
San Jose, California
March 25, 2026
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GCT SEMICONDUCTOR HOLDING, INC.
Consolidated Balance Sheets
(in thousands, except per share amounts)
Assets
Current assets:
Cash and cash equivalents $ 590 $ 1,435
Prepaid expenses and other current assets 2,318 2,332
Property and equipment, net 2,671 869
Operating lease right-of-use assets 708 849
Intangibles, net — 65
Liabilities and Stockholders’ Deficit
Current liabilities:
Contract liabilities — 48
Accrued and other current liabilities 21,680 21,205
Common stock forward liability 3 315
Operating lease liabilities, current 686 697
Convertible promissory notes, net of current 6,046 4,947
Net defined benefit liabilities 7,598 7,055
Long-term operating lease liabilities 41 177
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Accumulated other comprehensive income 1,181 1,518
Total liabilities and stockholders’ deficit $ 15,644 $ 19,897
The accompanying notes are an integral part of these consolidated financial statements.
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GCT SEMICONDUCTOR HOLDING, INC.
Consolidated Statements of Operations
(in thousands, except per share amounts)
Year EndedDecember 31,
Net revenues:
Cost of net revenues:
Operating expenses:
Gain on extinguishment of liability — (14,636 )
Loss on impairment of long-lived assets — 787
Gain (loss) on foreign currency transactions, net (784 ) 4,690
Change in fair value of common stock warrant liabilities 880 2,208
Change in fair value of convertible promissory notes (336 ) (1,470 )
Change in fair value of common stock forward liability 312 (586 )
Loss before provision for income taxes (42,470 ) (11,934 )
Provision for income taxes 902 445
Net loss per common share:
Basic and diluted $ (0.82 ) $ (0.30 )
Weighted average common shares outstanding:
The accompanying notes are an integral part of these consolidated financial statements.
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GCT SEMICONDUCTOR HOLDING, INC.
Consolidated Statements of Comprehensive Loss
(in thousands)
Year EndedDecember 31,
Comprehensive loss, net of taxes:
Foreign currency translation adjustment (337 ) 3,056
The accompanying notes are an integral part of these consolidated financial statements.
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GCT SEMICONDUCTOR HOLDING, INC.
Consolidated Statements of Stockholders’ Deficit
(in thousands)
Accumulated
Additional Other Total
Common Stock Paid-In Comprehensive Accumulated Stockholders’
Shares Amount Capital Income (Loss) Deficit Deficit
Issuance of common stock to underwriter 110 — 667 — — 667
Issuance of common stock upon exercise of stock options 133 — 15 — — 15
Release of vested restricted stock units 98 — — — — —
Forfeiture of unvested sponsor earnout shares (1,350 ) — — — — —
Stock-based compensation — — 2,700 — — 2,700
Foreign currency translation adjustment — — — 3,056 — 3,056
Issuance of common stock under common stock purchase agreement 75 — 190 — — 190
Issuance of common stock under at-market agreement 1,405 — 2,210 — — 2,210
Issuance of common stock upon exercise of stock options 189 — 21 — — 21
Release of vested restricted stock units 577 — — — — —
Stock-based compensation — — 6,330 — — 6,330
Foreign currency translation adjustment — — — (337 ) — (337 )
The accompanying notes are an integral part of these consolidated financial statements.
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GCT SEMICONDUCTOR HOLDING, INC.
Consolidated Statements of Cash Flows
(in thousands)
Year Ended December 31,
Operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 744 691
Loss on impairment of long-lived assets — 787
Amortization of right-of-use assets 707 634
Issuance of common stock to underwriter — 667
Change in provision for credit losses 2,813 (431 )
Change in fair value of warrant liabilities (880 ) (2,208 )
Change in fair value of convertible promissory notes 336 1,470
Change in fair value of common stock forward liability (312 ) 586
Gain on extinguishment of liability — (14,636 )
Changes in operating assets and liabilities:
Prepaid expenses and other current assets 187 1,064
Contract liabilities (48 ) —
Accrued and other current liabilities 1,205 (3,232 )
Net defined benefit liabilities 536 480
Other taxes payable (23 ) 91
Lease liabilities (917 ) (620 )
Net cash used in operating activities (30,675 ) (30,957 )
Investing activities:
Purchases of property and equipment (2,411 ) (542 )
Net cash used in investing activities (2,411 ) (542 )
Financing activities:
Proceeds from issuance of convertible promissory notes 1,860 16,290
Proceeds from issuance of common stock under at-market agreement 2,285 —
Proceeds from exercise of stock options 21 15
Payment of common stock issuance costs (1,181 ) —
Tax withholding on restricted stock units (11 ) —
Repayments of convertible promissory notes — (5,637 )
Net cash provided by financing activities 32,246 36,473
Effect of exchange rate changes on cash and cash equivalents (5 ) (3,797 )
Net increase (decrease) in cash and cash equivalents (845 ) 1,177
Cash and cash equivalents at beginning of period 1,435 258
Cash and cash equivalents at end of period $ 590 $ 1,435
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 324 $ 269
Cash paid for operating leases $ 728 $ 744
Non-cash financing activities:
Settlement of common stock forward liability in equity $ — $ 271
The accompanying notes are an integral part of these consolidated financial statements.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
1. Organization and Liquidity
Description of Business
GCT Semiconductor Holding, Inc. (formerly known as Concord Acquisition Corp III) and its wholly owned subsidiaries (collectively “GCT” or the “Company”) is headquartered in San Jose, California, with international offices in South Korea, China, Taiwan, and Japan. The Company is a fabless semiconductor company that specializes in the design, manufacturing, and sale of communication semiconductors, including high-speed wireless communication technologies such as 5G/4.75G/4.5G/4G transceivers and modems, which are essential for a wide variety of industrial, business-to-business (“B2B”) and consumer applications.
Liquidity
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets, liabilities, and commitments in the normal course of business. Through December 31, 2025, the Company has incurred operating losses and negative cash flows from operating activities and had an accumulated deficit of $605.4 million as of December 31, 2025. The Company’s existing sources of liquidity as of December 31, 2025 include cash and cash equivalents of $0.6 million. The Company has historically funded operations primarily with issuances of capital stock and the incurrence of debt. The Company is dependent on additional fundraising in order to sustain its ongoing operations.
In March 2024, the Company received $17.2 million in cash proceeds from the reverse recapitalization and PIPE Financing (as defined in Note 3), net of transaction costs. In April 2024, the Company executed a common stock purchase agreement (“Purchase Agreement”) with B. Riley Principal Capital II, LLC (“B. Riley”). Pursuant to the Purchase Agreement, the Company has the right, but not the obligation, to sell, from time to time, B. Riley up to $50.0 million worth of shares of the Company’s common stock at its request, at any time prior to June 2026, subject to compliance with the required conditions and limitations. Through December 31, 2025, the Company utilized $9.9 million of the contractual commitment amount under the Purchase Agreement.
In April 2025, the Company executed an at-market issuance sales agreement (“ATM Agreement”) with B. Riley Securities, Inc. and H.C. Wainwright & Co., LLC, acting as sales agents. The ATM Agreement allows the Company to sell its common stock for gross proceeds of up to $75.0 million from time to time, through at-the-market offerings or to the sales agents as principal purchasers (“ATM Offering”). During the year ended December 31, 2025, the Company received net proceeds of approximately $2.2 million in cash related to the ATM Offering, respectively (see Note 9).
In May 2025, the Company entered into securities purchase agreements (“RDO Purchase Agreements”) with certain institutional investors (“Purchasers”) pursuant to which the Company sold shares of common stock and warrants to purchase common stock to the Purchasers and received net proceeds of $9.9 million. This registered direct offering (“RDO”) closed on May 16, 2025 (see Note 9).
In December 2025, the Company entered into a convertible promissory note purchase agreement with Indigo Capital LP (“Indigo”), which provides for the issuance of convertible promissory notes of up to $20.0 million in aggregate (“Indigo Notes”). The Company received net proceeds of $1.9 million from the issuance of two Indigo Notes with a principal amount $1.0 million each (see Note 7).
To fund its operations over the longer term, the Company will need to start generating positive cash flows, renegotiate its existing debt obligations, and raise additional capital through debt or equity financing. Management’s plans include seeking additional financing, such as issuances of equity, issuances of debt and convertible debt instruments. Sales of additional equity securities, convertible debt, or warrants by the Company could result in the dilution of the interests of existing stockholders. The Company will require significant additional financing to meet its planned capital needs and is pursuing opportunities to obtain additional financing through equity or debt alternatives. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to the Company or at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern beyond twelve months after the date that these consolidated financial statements are issued. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
2. Summary of Significant Accounting Policies and Basis of Presentation
Principles of Consolidation and Basis of Presentation
The consolidated financial statements and accompanying notes include the accounts of the Company and its wholly owned subsidiaries, after elimination of intercompany balances and transactions. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for financial information.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
Reclassifications
Certain reclassifications have been made to prior period amounts to conform to the current year presentation. Specifically, the public warrants have been transferred from Level 3 to Level 1 within the fair value hierarchy due to the increased availability of quoted prices in an active market for identical instruments. The public warrants were previously classified as Level 3 for the year ended December 31, 2024, as reported in the Annual Report on Form 10-K filed with the SEC on March 25, 2025.
Use of Estimates
The preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates, and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. These judgments, estimates, and assumptions are used for but not limited to revenue recognition, provision for credit losses, deferred income taxes and related valuation allowances, inventory obsolescence, recoverability of long-lived assets, certain accrued expenses, stock-based compensation, determination of the fair value of the Company’s financial instruments, including convertible promissory notes, warrant liabilities, stock options, and common stock forward liability. The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances. Actual results could differ from these estimates, and these differences may be material.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. The Company deposits its cash primarily in checking and money market accounts with high quality financial institutions.
Fair Value of Financial Instruments
The carrying amount of certain financial instruments held by the Company, such as cash equivalents, accounts receivable, contract assets and liabilities, accounts payable, and accrued and other current liabilities, approximate fair value due to their short maturities. The carrying amounts of the Company’s bank borrowings and lease liabilities approximate their fair values due to the market interest rates that these obligations bear and interest rates available to the Company.
Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:
A financial instrument’s categorization within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s Level 3 financial instruments consist of a common stock forward liability, convertible promissory notes, and warrant liabilities.
Risk and Uncertainties
The Company is subject to certain risks and uncertainties and believes changes in any of the following areas could have a material adverse effect on the Company’s future financial position or results of operations or cash flows: 5G and other new product development, including market receptivity, the ability to satisfy obligations under development agreements with major partners, litigation or claims against the Company based on intellectual property, patent, product regulation or other factors, competition from other products, general economic conditions, the ability to attract and retain qualified employees and ultimately to sustain profitable operations.
The semiconductor industry is characterized by rapid technological change, competition, competitive pricing pressures, and cyclical market patterns. The Company’s financial results are affected by a wide variety of factors, such as general economic conditions specific to the semiconductor industry and the Company’s particular market, the timely implementation of new 5G and other new products, new manufacturing process technologies, and the ability to safeguard patents and intellectual property in a rapidly evolving market. In
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
addition, the semiconductor market has historically been cyclical and subject to significant economic downturns. As a result, the Company may experience significant period-to-period fluctuations in the consolidated operating results due to the these factors.
The Company’s revenue may be impacted by its ability to obtain adequate wafer supplies from foundries and back-end production capacity from the Company’s test and assembly subcontractors. The foundries with which the Company currently has arrangements may not be willing or able to satisfy all of the Company’s manufacturing requirements on a timely basis or at favorable prices. The Company is also subject to the risks of service disruptions, raw material shortages and price increases by its foundries. Such disruptions, shortages and price increases could harm the Company’s consolidated operating results.
Provision for Credit Losses
The provision for credit losses is based on the Company’s assessment of the collectibility of its customer accounts. The Company reviews the provision for credit losses by considering certain factors such as historical experience, industry data, credit quality, age of balances, and current economic conditions that may affect a customer’s ability to pay. Uncollectible receivables are written off when all efforts to collect have been exhausted, and recoveries are recognized when they are recovered. The Company had a provision for credit losses of approximately $4.0 million and $1.2 million as of December 31, 2025 and 2024, respectively.
Inventory
Inventory is stated at the lower of cost or net realizable value. Cost is determined by actual cost on a first-in, first-out basis. The Company’s inventory is concentrated in high technology parts and components that may be specialized in nature or subject to rapid technological obsolescence. The Company considers the following characteristics, in addition to the specialized nature and potential technological obsolescence of the Company’s inventory, including age of inventory on hand and that the inventory may be returned from distributors, historical sales levels, estimated future demand within the next six months, inventory commitments or potential product revisions, in evaluating net realizable value. During the years ended December 31, 2025 and 2024, the Company recognized a reduction related to the carrying value of the inventory of $1.1 million and $0.4 million, respectively, included in cost of net revenues. Once inventory has been written down below cost, it is not subsequently written up.
Property and Equipment, Net
Property and equipment are recorded at cost less accumulated depreciation and amortization. Depreciation is recognized on a straight-line basis over the estimated useful lives of the assets, generally three to seven years. Leasehold improvements are amortized over the shorter of the remaining lease term or the estimated useful life of the assets. Maintenance and repairs that do not extend the life or improve an asset are expensed in the period incurred.
Leases
The Company’s lease portfolio includes leases for our corporate headquarters, office spaces, and warehouses. The Company determines if an arrangement is a lease at the inception of the contract. Right-of-use assets and lease liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses an incremental borrowing rate based on the information available at lease commencement date in determining the present value of lease payments. Right-of-use assets are adjusted for lease incentive amounts expected to be received. On the lease commencement date, the Company estimates and includes in lease payments any lease incentive amounts based on future events when (1) the events are within its control and (2) the event triggering the right to receive the incentive is deemed reasonably certain to occur. If the lease incentive received is greater or less than the amount recognized at lease commencement, the Company recognizes the difference as an adjustment to right-of-use asset and lease liability, as applicable. The Company does not have leases with residual value guarantees or similar covenants. Certain lease arrangements may include options to extend or terminate the lease. The Company includes these provisions in the right-of-use asset and lease liabilities only when it is reasonably certain that the Company will exercise that option.
Right-of-use assets and lease liabilities are remeasured upon certain modifications to leases using the present value of remaining lease payments and estimated incremental borrowing rate upon lease modification. Operating lease cost is recognized on a straight-line basis over the lease term, and includes amounts related to short-term leases. The Company recognizes variable lease payments as operating expenses in the period in which the obligation for those payments is incurred. Variable lease payments primarily include common area maintenance, utilities, real estate taxes, insurance, and other operating costs that are passed on from the lessor in proportion to the space we lease.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
The Company has elected not to recognize right-of-use assets and lease liabilities only for short-term leases of transportation equipment that have a lease term of 12 months or less. For leases of office equipment, the Company has elected the practical expedient to account for the lease and non-lease maintenance components as a single lease component.
Impairment of Long-Lived Assets
The Company has long-lived assets such as tangible property and equipment, right-of-use assets, and identified intangible assets consisting of acquired patents and core technology. When events or changes in circumstances occur that could indicate the carrying value of long-lived assets may not be recoverable, the Company assesses recoverability by determining whether the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If the undiscounted cash flow is less, an impairment charge is recognized for the excess of the carrying amounts of these assets over the fair values. Fair values are determined by discounted future cash flows, appraisals or other methods.
During the year ended December 31, 2024, the Company recognized an impairment charge of $0.8 million related to certain balances classified as other assets. This charge has been presented as a separate line item within the consolidated statement of operations. No impairment charges were recorded for the year ended December 31, 2025.
Revenue Recognition
The Company’s revenues are generated by the sale of 4G and 5G mobile semiconductor solutions consisting of product and platform solutions aimed at the 4G LTE and 5G NR (New Radio) wireless communications industry, and related development services and technical advice and maintenance services. To determine when revenues are recognized, the Company performs the following five steps: (1) identify the contract(s) with a customer, (2) identify the performance obligation in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when or as the Company satisfies a performance obligation.
The revenues from product sales are identified and determined pursuant to purchase orders. The Company considers a performance obligation satisfied once it has transferred control of a good or product to a customer, meaning the customer has the ability to direct the use and obtain the benefit of the product, which is generally at the time of shipment.
Service revenues are identified and determined based on each service agreement and recognized over time or at a point in time, depending on the evaluation of when the customer obtains control of the promised goods or services, which is generally as services are rendered. For contracts that include multiple performance obligations, the Company allocates revenue to each performance obligation based on estimates of the relative stand-alone selling price that the Company would charge the customer for each promised product or service.
All product revenue presented in the consolidated statements of operations is recognized at a point in time, and all service revenue is recognized over time.
Contract Assets and Liabilities
Contract assets primarily represent revenue earnings over time for which the Company does not have an unconditional right to payment based on the terms of the contracts, which generally are not yet billable. The Company does not have impairment losses associated with customer contract asset balances during the years ended December 31, 2025 and 2024.
Contract liabilities consist of fees invoiced to or paid by the Company’s customer for which the associated performance obligations have not been satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above. Contract assets and liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current in the consolidated balance sheets when the Company expects to complete the related performance obligations and invoice the customers within one year of the balance sheet date, and as long-term when the Company expects to complete the related performance obligations and invoice the customers more than one year out from the balance sheet date. Contract liabilities are classified as current in the consolidated balance sheets when the revenue recognition associated with the related customer payments and invoicing is expected to occur within one year of the balance sheet date and as long-term when the revenue recognition associated with the related customer payments and invoicing is expected in more than once year from the balance sheet date.
Product Warranty
The Company provides customers with warranty claims for certain products, generally lasting 12 months from the time of sale, and warranty-related services are not considered a separate performance obligation. The Company makes estimates of product warranty expense using historical experience rates and any specifically identified failures and accrues estimated warranty expense at the time
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
revenue is recognized as a cost of net revenues. The Company estimates the costs of warranty obligations based on historical experience of known product failure rates and anticipated rates of warranty claims, use of materials to repair or replace defective products, and service delivery costs incurred in correcting the product issues. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. During the years ended December 31, 2025 and 2024, the product warranty activity and related reserve balances were not material.
Concentration of Credit Risk
The Company’s financial instruments subject to credit risk concentration consist of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents primarily with one financial institution located in the United States and another located in South Korea, where amounts deposited may exceed Federal Deposit Insurance Corporation or Korea Deposit Insurance Corporation limits. The Company’s accounts receivable balances are primarily derived from revenues recognized from customers located in the United States, China, South Korea, Japan, and Taiwan. The Company performs ongoing credit evaluations of the financial condition of its customers and distributors and generally does not require collateral.
The Company’s net revenues and accounts receivable are concentrated among a few significant customers, which could expose the Company to financial risk in the event of adverse developments. The following represents the concentration of the Company’s gross accounts receivable among key customers to the extent their share exceeds 10%:
The following table includes customers that individually accounted for more than 10% of the Company’s net revenues in the periods indicated:
Year EndedDecember 31,
Customer A 20 % *%
Customer B 14 % — %
Customer F — % 16 %
Customer O 17 % *%
Customer K — % 22 %
Customer L *% 10 %
*Less than 10%.
Management closely monitors the creditworthiness and performance of these key customers and has established credit limits and terms to mitigate potential credit risks. The Company also continues diversifying its customer base and exploring opportunities to reduce its reliance on a few major customers.
Cost of Net Revenues
Cost of net revenues consists of direct and indirect costs related to the manufacture of the Company’s products. Direct costs include wafer costs and costs relating to assembly and testing performed by third-party contract manufacturers. Indirect costs consist of provisions for excess and obsolete inventory, royalties, allocated overhead for employee costs and facility costs, warranty and the amortization of the Company’s production mask sets and certain intangible assets. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of net revenues in the consolidated statements of operations.
Stock-Based Compensation
Compensation costs related to stock option grants are based on the fair value of the options on the date of grant, net of estimated forfeitures. The Company determines the grant date fair value of the options using the Black-Scholes option-pricing model and the
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
associated stock-based compensation expense is generally recognized on a straight-line basis over the period in which an employee is required to provide service in exchange for the options, which generally equals the vesting period.
Compensation costs related to the restricted stock units (“RSUs”) grants are based on the common stock price on the date of grant, net of estimated forfeitures. The RSUs that are based on the fixed monetary amount are initially classified as a liability and reclassified to equity when the number of shares to be issued becomes determinable, and other equity classification criteria are met. The RSUs that are based on the fixed number of shares generally meet equity classification criteria on their grant dates. The associated stock-based compensation expense is recognized on a straight-line basis over the vesting period, which is generally between one and four years.
Net Loss Per Common Share
Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average shares outstanding. In computing diluted net loss per common share, undistributed earnings are re-allocated to reflect the potential impact of dilutive securities. Diluted net loss per common share is computed by dividing net loss by diluted weighted average shares outstanding, including potentially dilutive securities, unless anti-dilutive. Due to the net loss for the years ended December 31, 2025 and 2024, all potentially dilutive securities are anti-dilutive. Therefore, basic and diluted net loss per common share are equal for each period.
Income Taxes
The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax assets and liabilities. Valuation allowances are established when necessary to reduce deferred tax assets where, based upon the available evidence, management concludes that it is more-likely-than-not that the deferred tax assets will not be realized.
The Company records a liability for the uncertain tax positions taken or expected to be taken on the Company’s tax return when it is more-likely-than-not that the tax position might be challenged despite the Company’s belief that the tax return positions are fully supportable, and additional taxes will be due as a result. To the extent that the assessment of such tax positions changes, for example, based on the outcome of a tax audit, the change in estimate is recorded in the period in which the determination is made. The provision for income taxes includes the impact of provisions for uncertain tax positions. Interest and penalties related to unrecognized tax benefits are included within the provision for income taxes.
Other Taxes Payable
Other taxes payable primarily include excise tax assumed by the Company from Concord Acquisition Corp. III (“Concord III”), its predecessor entity, related to the historical common stock redemptions. The Company does not anticipate settling this liability in cash within twelve months from the reporting date, and it is presented as noncurrent in the consolidated balance sheets.
Foreign Currency
Financial statements of foreign subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at the end-of-period exchange rates or at historical exchange rates for purposes of consolidation. Revenues and expenses are translated using average exchange rates during the reporting period. Translation adjustments are included in accumulated other comprehensive income or loss within stockholders’ deficit. Gains and losses resulting from transactions denominated in a currency other than the functional currency are presented separately in the consolidated statements of operations.
For the year ended December 31, 2025, the Company recognized realized foreign currency exchange losses of $0.4 million and unrealized foreign currency exchange losses of $0.4 million. For the year ended December 31, 2024, the Company recognized realized foreign currency exchange gains of $1.3 million and unrealized foreign currency exchange gains of $3.4 million.
Convertible Promissory Notes
The Company has elected the fair value option to account for its outstanding convertible promissory notes, with changes in estimated fair value presented separately under the corresponding caption in the consolidated statements of operations. The Company has made this election as the fair value option better reflects the underlying economics within convertible promissory notes. Through December 31, 2025, there were no changes in the instrument-specific credit risk that are required to be presented as a component of accumulated other comprehensive income.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) includes all changes within equity that are not the result of transactions with stockholders. Accumulated other comprehensive income (loss) includes foreign currency translation adjustments arising from the consolidation of the Company’s foreign subsidiaries.
Common Stock Warrants
Common stock warrants are classified as liabilities if they do not meet equity classification requirements based on their settlement mechanism upon a change of control and similar transactions. The corresponding liability is remeasured at fair value while the common stock warrants remain outstanding, with changes in fair value presented separately in the consolidated statements of operations. Common stock warrants that meet equity classification requirements are credited to stockholders’ deficit on their issuance dates and are not subsequently remeasured.
Certain Equity Contracts
The Company’s outstanding promises to potentially issue additional shares in the future based on certain market conditions, including the Legacy GCT Earnout Shares and the Sponsor Earnout Shares, are discussed in Note 3. These financial instruments were determined to be equity classified and credited to the stockholders’ deficit upon consummation of the Business Combination.
Segment Information
The Company operates in one operating and reportable segment, providing fabless semiconductor products to customers. The Company’s chief operating decision-maker is its Chief Executive Officer. Since the Company operates in a single operating and reportable segment represented by the entire entity, significant segment expenses are provided to the chief operating decision-maker using the same basis as presented in the consolidated statements of operations. When evaluating the Company’s financial performance and making strategic decisions on budgeting and resource allocation, the chief operating decision-maker utilizes consolidated revenue, operating expenses, other income and expenses, and net loss. The chief operating decision-maker regularly reviews assets, liabilities, revenue, expenses, and profitability measures at the same level and using the same categories as presented in the Company’s consolidated financial statements.
Emerging Growth Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS” Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards using private company timelines. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires companies to disclose, on an annual basis, specific categories in the effective tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. In addition, companies are required to disclose additional information about income taxes paid. ASU 2023-09 is effective for the Company as an emerging growth filer for annual periods beginning after December 15, 2025, with early adoption permitted. The standard is required to be adopted on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the effect of the adoption of ASU 2023-09 on its consolidated financial statements and related disclosures.
In November 2024, the FASB issued ASU 2024-03, Income Statement - ReportingComprehensive Income (Topic 220): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires public entities to provide disaggregated disclosures of certain expense captions presented on the face of the income statement into specific categories within the notes to the consolidated financial statements. ASU 2024-03 is effective for the Company’s annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The ASU may be applied either on a prospective or retrospective basis. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements and related disclosures.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
In July 2025, the FASB issued ASU 2025-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), which provides a practical expedient to measure expected credit losses on accounts receivable and contract assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the timing of the adoption and the impact of ASU 2025-05 on its consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606) (“ASU 2025-07”). The guidance refines the scope of Topic 815 to clarify which contracts are subject to derivative accounting. The guidance also provides clarification under Topic 606 for share-based noncash consideration from a customer in a revenue contract. The amendments in ASU 2025-07 are effective for fiscal years beginning after December 15, 2026, and interim reporting periods, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-07 on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270) Narrow-Scope Improvements (“ASU 2025-11”). The amendments in this update clarify interim disclosure requirements and the applicability of Topic 270. The objective of the update is to provide clarity about current interim requirements. The amendments in this update also include a disclosure principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. The amendments in ASU 2025-11 are effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-11 on its future interim consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements (“ASU 2025-12”). ASU 2025-12 addresses suggestions received from stakeholders regarding the Accounting Standards Codification (“ASC”) and makes other incremental improvements to U.S. GAAP. The update represents changes to the Codification that clarify, correct errors in or make other improvements to a variety of topics that are intended to make it easier to understand and apply. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026 and interim periods within those fiscal years. The amendments to ASC 260, Earnings Per Share, must be applied retrospectively, while all other amendments may be applied prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2025-12 on its consolidated financial statements and related disclosures.
3. Reverse Recapitalization
On March 26, 2024 (the “Closing Date” or “Closing”), Concord III, a Delaware corporation, consummated a series of transactions that resulted in the combination of Gibraltar Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Concord III (“Merger Sub”), and GCT Semiconductor, Inc. (“Legacy GCT”), pursuant to a Business Combination Agreement, dated November 2, 2023 (as amended, the “Business Combination Agreement”), by and among Concord III, Merger Sub and Legacy GCT. Pursuant to the terms of the Business Combination Agreement, Merger Sub merged with and into Legacy GCT, with Legacy GCT surviving the merger as a wholly-owned subsidiary of Concord III (the “Business Combination”). On the Closing Date, Concord III changed its name from Concord III to “GCT Semiconductor Holding, Inc.”
The Business Combination was accounted for as a reverse recapitalization with Legacy GCT being the accounting acquirer and Concord III identified as the acquired company for accounting purposes. Subsequent to the Business Combination, the shares and net loss per common share information prior to the Closing have been retroactively restated to reflect the exchange ratio established at the Closing of approximately 0.1868.
Prior to the Business Combination, Concord III’s public shares and public redeemable warrants were listed on the New York Stock Exchange (“NYSE”) under the symbols “CNDB.U,” “CNDB,” and “CNDB.WS,” respectively. On March 27, 2024, the Company’s common stock and public warrants began trading on the NYSE under the symbols “GCTS” and “GCTSW,” respectively. In connection with the Closing, Concord III’s Class A common stock and Class B common stock were recapitalized into a single class of common stock.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
In connection with the Business Combination described above, Concord III completed the acquisition of Legacy GCT and acquired 100% of Legacy GCT’s common stock. Legacy GCT received net proceeds of $17.1 million from the PIPE Financing (as defined below). Concord III incurred total direct transaction costs of $13.1 million, which were expensed by Concord III, and of which $0.9 million related to the PIPE Financing. Legacy GCT incurred transaction costs of $8.9 million, consisting of legal, accounting, and other professional fees, which were recorded as additional paid-in capital. Each share of Legacy GCT capital stock received a deemed value of $10.00 per share after giving effect to the applicable exchange ratio of 0.1868. Upon Closing of the Business Combination, the following occurred:
•
Each share of Legacy GCT common stock issued and outstanding prior to the Closing was cancelled and converted into the right to receive a number of shares of the Company common stock at the exchange ratio of 0.1868.
•
Each outstanding instrument of Legacy GCT stock options, RSUs, and warrant shares were converted into equivalent Company stock options, RSUs, and warrant shares with the same terms and conditions and at the exchange ratio of 0.1868.
•
Certain GCT convertible promissory notes, including the CVT Financing (see Note 7), were automatically converted into the right to receive a number of shares of the Company common stock at the conversion price of $6.67 per share (see Note 7).
Immediately after the Closing, the Company’s outstanding common stock included the following components (in thousands):
Shares
Common stock of Concord III outstanding prior to the Business Combination 3,941
Less: redemption of Concord III’s common stock (3,766 )
Sponsor earnout common stock outstanding prior to the Business Combination 8,625
Common stock of Concord III issued and outstanding 8,800
Common stock issued in PIPE Financing 4,530
Legacy GCT common stock 32,503
Total common stock issued and outstanding 45,833
The Business Combination was accounted for as a reverse recapitalization under U.S. GAAP because Legacy GCT was determined to be the accounting acquirer, and Concord III was identified as the accounting acquiree for financial reporting purposes. Accordingly, the consolidated financial statements of the Company represent a continuation of the consolidated financial statements of Legacy GCT, with the Business Combination treated as the equivalent of Legacy GCT issuing its common stock for the net assets of Concord III, accompanied by a recapitalization, and the net assets of Concord III were recorded at historical cost, with no goodwill or other intangible assets recorded. The results of operations prior to the Business Combination are those of Legacy GCT.
Legacy GCT was determined to be the accounting acquirer based the following facts and circumstances:
•
Legacy GCT stockholders comprised a relative majority of the voting power of GCT;
•
Legacy GCT stockholders had the ability to nominate a majority of the members of the board of directors of GCT;
•
Legacy GCT’s operations prior to the Business Combination comprised the only ongoing operations of GCT;
•
Legacy GCT’s senior management comprised the senior management of GCT;
•
GCT substantially assumed the Legacy GCT name;
•
Legacy GCT’s headquarters became GCT’s headquarters; and
•
Concord III did not meet the definition of a business.
PIPE Financing
Concurrent with the execution of the Business Combination Agreement, certain investors entered into agreements and committed to purchase in a private placement an aggregate of 4,529,967 shares of the Company’s common stock (the “PIPE Shares”) at a purchase price of $6.67 per share for an aggregate purchase price of $30.2 million (the “PIPE Financing”) upon the Business Combination Closing. The PIPE Financing was consummated immediately prior to the Closing and resulted in net proceeds of $17.1 million to the Company.
Private Placement Warrants and Public Warrants
In November 2021, Concord III issued warrants to purchase shares of Concord III’s common stock that were assumed by the Company at the Closing of the Business Combination on the same terms and conditions: (i) 9,400,000 warrant shares that were issued in a private
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
placement and held by the sponsor and another company (the “Private Placement Warrants”) and (ii) 17,250,000 warrant shares that were issued in connection with the initial public offering of Concord III (the “Public Warrants”).
The Private Placement Warrants were reallocated at the Closing of the Business Combination as follows: (i) 4,492,650 warrants were vested and retained by the sponsor parties, (ii) 2,087,350 warrants were reallocated from the sponsor parties to certain recipients at Legacy GCT’s discretion to incentivize investment, and (iii) 2,820,000 were forfeited by the sponsor parties.
Subsequent to the Closing, the outstanding Private Placement Warrants and Public Warrants remained liability-classified as the applicable provisions precluding classification in equity did not change as a result of the Business Combination. Refer to Note 10 for information about the warrants outstanding as of December 31, 2025.
Legacy GCT Earnout Shares
At the Closing of the Business Combination, former Legacy GCT stockholders and other investors of Legacy GCT have the right to receive up to 20,000,000 shares of Company common stock (“Legacy GCT Earnout Shares”). The Legacy GCT Earnout Shares may vest between May 2024 and March 2029 if the volume-weighted average price (“VWAP”) of the Company’s common stock for any 20 trading days within 30 consecutive trading day periods exceeds the following amounts per share (“VWAP Threshold”): (i) one-third of the shares based on the $12.50 per share VWAP Threshold, (ii) one-third of the shares based on the $15.00 per share VWAP Threshold, and (iii) one-third of the shares based on the $17.50 per share VWAP Threshold.
In the event of a future transaction that results in a change in control in which shares of the Company common stock are converted into the right to receive cash or other consideration having a value equal to or in excess of a triggering event, then the Legacy GCT Earnout Shares subject to the applicable triggering event that have not been previously issued will be issued to the Legacy GCT stockholders effective as of immediately prior to the consummation of such transaction. In the event of a transaction that results in a change in control in which shares of Company common stock are converted into the right to receive cash or other consideration having a value less than a triggering event, then the Legacy GCT Earnout Shares subject to the applicable triggering event that have not been previously issued will be forfeited.
The Legacy GCT Earnout Shares were recognized at a fair value of approximately $108.8 million upon the Closing and classified within the stockholders’ deficit as they are indexed solely to the Company’s common stock and are otherwise not precluded from equity classification based on their settlement provisions. Under the reverse recapitalization method of accounting, the fair value of the Legacy GCT Earnout Shares was treated as a deemed dividend and, in the absence of retained earnings, credited to additional paid-in capital without any impact on the stockholders’ deficit balances.
Sponsor Earnout Shares
Concurrently with entering into the Business Combination Agreement, the sponsor parties and the Company entered into that certain sponsor support agreement, as amended, modified, or supplemented (the “Sponsor Support Agreement”). Pursuant to the terms of the Sponsor Support Agreement, the sponsor parties have the right to receive up to 1,920,375 shares of the Company’s common stock (“Sponsor Earnout Shares”). The Sponsor Earnout Shares may vest between September 2024 and March 2029 if the VWAP of the Company’s common stock for any 20 trading days within 30 consecutive trading day periods exceeds the following VWAP Thresholds: (i) one-third of the shares based on the $12.50 per share VWAP Threshold, (ii) one-third of the shares based on the $15.00 per share VWAP Threshold, and (iii) one-third of the shares based on the $17.50 per share VWAP Threshold.
The Sponsor Earnout Shares were recognized at a fair value of approximately $10.4 million upon the Closing and classified within stockholders’ deficit as they are indexed solely to the Company’s common stock and are otherwise not precluded from equity classification based on their settlement provisions. Under the reverse recapitalization method of accounting, the fair value of the Sponsor Earnout Shares was treated as a deemed dividend and, in the absence of retained earnings, credited to additional paid-in capital without any impact on the stockholders’ deficit balances.
In July 2024, the number of Sponsor Earnout Shares subject to the market-based vesting condition was reduced to 570,796 shares of the Company’s common stock, as the sponsor parties did not meet the required performance condition for the entire grant. The remaining 1,349,579 shares previously included in the outstanding common stock were forfeited during the year ended December 31, 2024. No adjustments to the stockholders’ deficit were required upon the forfeiture of the share-based awards that contained market conditions.
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
4. Disaggregation of Revenue
All product revenue presented in the consolidated statements of operations is recognized at a point in time, and all service revenue is recognized over time. Net revenues are categorized by customer location as follows (in thousands):
Year EndedDecember 31,
Contract Assets and Liabilities
Net revenues recognized during the years ended December 31, 2025 and 2024 for the amounts included in the contract liabilities balance at the beginning of the respective annual periods were not material in each period. The balances related to contract fulfillment were immaterial as of December 31, 2025 and 2024.
5. Fair Value of Measurements
Recurring Fair Value Measurements
The following financial instruments are measured at fair value on a recurring basis (in thousands):
Level 1 Level 2 Level 3 Total
Liabilities:
Convertible promissory notes $ — $ — $ 6,046 $ 6,046
Common stock forward liability — — 3 3
Level 1 Level 2 Level 3 Total
Liabilities:
Convertible promissory notes $ — $ — $ 4,947 $ 4,947
Common stock forward liability — — 315 315
Valuation Techniques and Inputs
The table below presents valuation techniques and inputs used in the fair value measurement categorized within Level 3 of the fair value hierarchy (in thousands):
Valuation techniques Inputs December 31, 2025 December 31, 2024
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GCT SEMICONDUCTOR HOLDING, INC.
Notes to Consolidated Financial Statements
As of December 31, 2025, the key inputs for the convertible promissory notes using the BLM were as follows: stock price of $1.20, implied volatility of 94.0%, remaining term of 2.2 years, risk-free rate of 3.48%, and credit spread of 5.80%.
As of December 31, 2025, the key inputs for the Indigo convertible promissory note using the DCF model were as follows: a remaining term of 0.04 years, risk-free rate of 3.74%, and credit spread of 5.80%.
The Public Warrants were initially classified within Level 3 of the fair value hierarchy due to the use of unobservable inputs. As of December 31, 2025, the Public Warrants were reclassified to Level 1 due to the increased availability of quoted prices in an active market for identical instruments.
As of December 31, 2025, the key inputs used to measure the private placement warrants using the BSM were as follows: exercise price of $11.50 per share, term to expiration of 3.2 years, volatility of 94.0%, and a risk-free rate of 3.54%. As of December 31, 2025, the key inputs for the other warrant liabilities using the BSM were as follows: an exercise price of $10.00 per share, or $18.75 per share, term to expiration ranging from 0.2 years to 0.8 years, volatility ranging from 65.0% to 71.4%, and a risk-free rate ranging from 3.49% to 3.68%.
As of December 31, 2025, the key inputs for the common stock forward valuation using the DCF model were as follows: a remaining term of 0.4 years and future risk-free rate estimates ranging from 3.63% to 3.74% for this period.
The following table sets forth a summary of the changes in the fair value of the convertible promissory notes (in thousands):
Change in fair value 336
The following table sets forth a summary of the changes in the fair value of the warrant liabilities (in thousands):
Change in fair value (880 )