Form 424B3 - Prospectus [Rule 424(b)(3)]

EXPLANTORY NOTE

This submission corrects an inadvertent error in the file number included in the submission header of the prior filing. The correct file number is 333-278809. All other information remains unchanged.

Prospectus Supplement No. 4

Filed Pursuant to Rule 424(b)(3)

File No. 333-278809

GCT Semiconductor Holding, Inc.

2290 North 1st Street, Suite 201

San Jose, California 95131

(408) 434-6040

Prospectus Supplement No. 4

(to the Prospectus dated May 23, 2024)

This Prospectus Supplement No. 4 supplements and amends the prospectus dated May 23, 2024, Prospectus Supplement No. 1 dated August 15, 2024, Prospectus Supplement No. 2 dated August 26, 2024, and Prospectus Supplement No. 3 dated September 27, 2024 (the “Prospectus”), relating to the issuance of an aggregate of up to 26,724,001 shares of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) and the sale from time to time by selling shareholders of (i) up to 35,970,732 shares of Common Stock consisting of (a) up to 6,580,000 shares of Common Stock issuable upon exercise of the Private Placement Warrants at a price of $11.50 per share, which were initially issued to Sponsors at an effective purchase price of $1.00, (b) 19,685,138 shares of Common Stock acquired by certain Selling Securityholders party to the Registration Rights Agreement (as defined therein), at an effective purchase price ranging from $0.00 to $120.48 per share, (c) up to 4,529,967 shares of Common Stock originally issued to investors in a private placement pursuant to those certain Subscription Agreements at an effective purchase price of $6.67 per share, (d) up to 1,781,626 shares of Common Stock issued to certain third parties as consideration for their entry into certain non-redemption agreements with Concord III and the Sponsor pursuant to which such Selling Securityholders agreed not to request redemption or to reverse any previously submitted redemption demand in connection with the Business Combination, (e) up to 500,000 shares of Common Stock underlying a convertible promissory note issued to a strategic investor in the principal amount of $5,000,000 and (f) up to 2,894,001 shares of Common Stock that are issuable upon the exercise of the GCT Warrants at an exercise price of $5.00, $10.00, and $18.75 per share, as applicable and (ii) up to 6,580,000 Private Placement Warrants, which were initially issued to Sponsors at an effective purchase price of $1.00.

On November 14, 2024, we filed with the U.S. Securities and Exchange Commission the attached Quarterly Report on Form 10-Q.

This Prospectus Supplement No. 4 should be read in conjunction with the Prospectus and is qualified by reference to the Prospectus except to the extent that the information in this Prospectus Supplement No. 4 supersedes the information contained in the Prospectus.

Our common stock is traded on the New York Stock Exchange under the symbol “GCTS”. On November 14, 2024, the last reported sale price of our common stock was $2.65 per share.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 16 of the Prospectus dated May 23, 2024.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this Prospectus Supplement No. 4 is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus Supplement No. 4 is November 15, 2024.

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-41013

GCT Semiconductor Holding, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	86-2171699
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2290 North 1st Street, Suite 201 San Jose, California	95131
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (408) 434‑6040

Not Applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	GCTS	The New York Stock Exchange
Warrants, each whole warrant exercisable for one share of Common Stock for $11.50 per share	GCTSW	The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

As of November 11, 2024, the registrant had 47,736,824 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10‑Q contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements about our financial condition, results of operations, earnings outlook and our prospects. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. Forward-looking statements are typically identified by words such as “plan,” “believe,” “expect,” “anticipate,” “intend,” “outlook,” “estimate,” “forecast,” “project,” “continue,” “could,” “may,” “might,” “possible,” “potential,” “predict,” “should,” “would” and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements are based on the current expectations of our management and are inherently subject to uncertainties and changes in circumstances and their potential effects and speak only as of the date of such statement. These forward-looking statements involve a number of risks, uncertainties or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

•

our financial and business performance, including our financial projections and business metrics;

•

changes in our strategy, future operations, financial position, estimated revenues and losses, forecasts, projected costs;

•

macroeconomic conditions, including labor disputes, inflationary impacts and disruptions to the global supply chain;

•

increase in supply chain costs, including raw materials, sourcing, transportation and energy;

•

the impact of tariffs and trade policies, particularly with respect to China;

•

our inability to anticipate the future market demands and future needs of our customers;

•

our ability to develop new 5th generation (“5G”) products under collaboration agreements with our major partners;

•

the impact of component shortages, suppliers’ lack of production capacity, natural disasters or pandemics on our sourcing operations and supply chain;

•

our future capital requirements and sources and uses of cash;

•

our ability to cover our future capital expenditures and to pay down our near-term debt obligations;

•

our ability to obtain funding for its operations;

•

our anticipated financial performance, including gross margin, and the expectation that our future results of operations will fluctuate on a quarterly basis for the foreseeable future;

•

our expected capital expenditures, cost of revenue and other future expenses, and the sources of funds to satisfy the liquidity needs of the Company;

•

the outcome of any legal proceedings that may be instituted against us following completion of the Business Combination and transactions contemplated thereby;

•

our ability to maintain the listing of our common stock on the NYSE;

•

the risk that the Business Combination disrupts current plans and operations;

•

the ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, and the ability of us to grow and manage growth profitably;

•

technology, cybersecurity, and data privacy risks;

•

geopolitical conditions, including political instability in the U.S. and abroad, unrest and sanctions, war, conflict, including the ongoing conflicts between Russia and Ukraine, conflicts in the Middle East, and increasing tensions between China and Taiwan;

•

legislative or regulatory risks relating to climate change;

•

reputational risks; and

•

other risks and uncertainties indicated in this Quarterly Report on Form 10‑Q, including those set forth under the section entitled “Risk Factors.”

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A detailed discussion of risks and uncertainties that could cause actual results and events to differ materially from such forward-looking statements is included in the section entitled “Risk Factors” contained in our Form S‑1 filed with the Securities and Exchange Commission (“SEC”) on May 22, 2024, as amended. These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10‑Q, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. New risk factors emerge from time to time, and it is not possible for us to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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		Page
Part I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Comprehensive Loss	3
	Condensed Consolidated Statements of Stockholders’ Deficit	4
	Condensed Consolidated Statements of Cash Flows	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
Item 4.	Controls and Procedures	40

Part II.	OTHER INFORMATION	41

Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		44

iii

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Balance Sheets

(unaudited, in thousands, except per share amounts)


	September 30, 2024			December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	1,812		$	258
Accounts receivable, net		6,441			4,920
Inventory		3,110			1,486
Contract assets		5,098			3,439
Prepaid expenses and other current assets		3,545			2,906
Total current assets		20,006			13,009
Property and equipment, net		641			772
Operating lease right-of-use assets		1,065			1,521
Intangibles, net		99			245
Other assets		810			881
Total assets	$	22,621		$	16,428
Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	1,070		$	17,814
Contract liabilities		511			48
Accrued and other current liabilities		22,365			23,956
Common stock forward liability		451			—
Borrowings		32,819			44,509
Convertible promissory notes, current		4,008			27,794
Operating lease liabilities, current		724			680
Total current liabilities		61,948			114,801
Convertible promissory notes, net of current		4,830			6,239
Net defined benefit liabilities		8,052			7,689
Long-term operating lease liabilities		358			850
Income taxes payable		2,245			2,178
Warrant liabilities		3,197			—
Other liabilities		242			108
Total liabilities		80,872			131,865
Commitments and contingencies (Note 8)
Stockholders’ deficit:
Preferred stock, par value $0.0001 per share; 40,000 and 82,352 shares authorized as of September 30, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of September 30, 2024 and December 31, 2023		—			—
Common stock, par value $0.0001 per share; 400,000 and 200,000 shares authorized as of September 30, 2024 and December 31, 2023, respectively; 47,611 and 24,166 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively(1)		5			3
Additional paid-in capital(1)		499,751			435,752
Accumulated other comprehensive loss		(946	)		(1,538	)
Accumulated deficit		(557,061	)		(549,654	)
Total stockholders’ deficit		(58,251	)		(115,437	)
Total liabilities and stockholders’ deficit	$	22,621		$	16,428

(1)

Amounts as of December 31, 2023 differ from those in prior year consolidated financial statements as they were retrospectively adjusted as a result of the accounting for the Business Combination (as defined in the Notes to the Unaudited Condensed Consolidated Financial Statements.)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Net revenues:
Product	$	1,715		$	4,026		$	4,111		$	8,667
Service		895			450			3,232			3,172
Total net revenues		2,610			4,476			7,343			11,839
Cost of net revenues:
Product		710			3,985			1,522			5,954
Service		274			(36	)		1,321			1,006
Total cost of net revenues		984			3,949			2,843			6,960
Gross profit		1,626			527			4,500			4,879
Operating expenses:
Research and development		4,210			2,367			13,895			7,254
Sales and marketing		949			744			2,921			2,337
General and administrative		2,379			1,433			8,075			5,537
Gain on extinguishment of liability		—			—			(14,636	)		—
Total operating expenses		7,538			4,544			10,255			15,128
Loss from operations		(5,912	)		(4,017	)		(5,755	)		(10,249	)
Interest expense		(667	)		(1,220	)		(3,509	)		(4,878	)
Other income (expenses), net		(481	)		929			2,044			2,946
Loss before provision for income taxes		(7,060	)		(4,308	)		(7,220	)		(12,181	)
Provision for income taxes		61			38			187			125
Net loss	$	(7,121	)	$	(4,346	)	$	(7,407	)	$	(12,306	)
Net loss per common share(1):
Basic and diluted	$	(0.16	)	$	(0.18	)	$	(0.19	)	$	(0.51	)
Weighted-average common shares outstanding(1):
Basic and diluted		45,645			24,055			38,418			23,934

(1)

Amounts for the three and nine months ended September 30, 2023 and before that date differ from those in prior year condensed consolidated financial statements as they were retrospectively adjusted as a result of the accounting for the Business Combination (as defined in the Notes to the Unaudited Condensed Consolidated Financial Statements).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited, in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Comprehensive loss, net of taxes:
Net loss	$	(7,121	)	$	(4,346	)	$	(7,407	)	$	(12,306	)
Foreign currency translation adjustment		(1,180	)		537			592			1,386
Comprehensive loss	$	(8,301	)	$	(3,809	)	$	(6,815	)	$	(10,920	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(unaudited, in thousands)


									Accumulated
							Additional		Other						Total
	Common Stock						Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares			Amount			Capital		Income (Loss)			Deficit			Deficit
Balance as of December 31, 2023		129,396		$	129		$	435,626	$	(1,538	)	$	(549,654	)	$	(115,437	)
Reverse recapitalization		(105,230	)		(126	)		126		—			—			—
Balance as of December 31, 2023(1)		24,166			3			435,752		(1,538	)		(549,654	)		(115,437	)
Reverse recapitalization transaction, net of transaction costs and acquired liabilities		21,667			2			50,031		—			—			50,033
Stock-based compensation		—			—			1,223		—			—			1,223
Foreign currency translation adjustment		—			—			—		1,064			—			1,064
Net income		—			—			—		—			757			757
Balance as of March 31, 2024		45,833			5			487,006		(474	)		(548,897	)		(62,360	)
Issuance of common stock under common stock purchase agreement		679			—			3,388		—			—			3,388
Issuance of commitment shares in connection with common stock purchase agreement		57			—			—		—			—			—
Issuance of common stock to underwriter		110			—			667		—			—			667
Stock-based compensation		—			—			323		—			—			323
Foreign currency translation adjustment		—			—			—		708			—			708
Net loss		—			—			—		—			(1,043	)		(1,043	)
Balance as of June 30, 2024		46,679			5			491,384		234			(549,940	)		(58,317	)
Issuance of common stock under common stock purchase agreement		1,422			—			5,541		—			—			5,541
Issuance of common stock and common stock warrants in a private placement		742			—			2,240		—			—			2,240
Issuance of common stock upon exercise of stock options		118			—			13		—			—			13
Forfeiture of unvested sponsor earnout shares		(1,350	)		—			—		—			—			—
Stock-based compensation		—			—			573		—			—			573
Foreign currency translation adjustment		—			—			—		(1,180	)		—			(1,180	)
Net loss		—			—			—		—			(7,121	)		(7,121	)
Balance as of September 30, 2024		47,611		$	5		$	499,751	$	(946	)	$	(557,061	)	$	(58,251	)

(1)

Amounts as of December 31, 2023 and before that date differ from those in prior year consolidated financial statements as they were retrospectively adjusted as a result of the accounting for the Business Combination (as defined in the Notes to the Unaudited Condensed Consolidated Financial Statements).

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(unaudited, in thousands)


									Accumulated
							Additional		Other						Total
	Common Stock						Paid-In		Comprehensive			Accumulated			Stockholders’
	Shares			Amount			Capital		Income (Loss)			Deficit			Deficit
Balance as of December 31, 2022		127,761		$	128		$	433,990	$	(1,862	)	$	(527,185	)	$	(94,929	)
Reverse recapitalization		(103,900	)		(126	)		126		—			—			—
Balance as of December 31, 2022(1)		23,861			2			434,116		(1,862	)		(527,185	)		(94,929	)
Issuance of common stock upon exercise of stock options(1)		5			—			1		—			—			1
Stock-based compensation		—			—			2		—			—			2
Foreign currency translation adjustment		—			—			—		674			—			674
Net loss		—			—			—		—			(1,393	)		(1,393	)
Balance as of March 31, 2023(1)		23,866			2			434,119		(1,188	)		(528,578	)		(95,645	)
Issuance of common stock upon exercise of stock options(1)		33			—			4		—			—			4
Issuance of common stock from convertible promissory notes conversion(1)		4			—			72		—			—			72
Stock-based compensation		—			—			3		—			—			3
Foreign currency translation adjustment		—			—			—		175			—			175
Net loss		—			—			—		—			(6,567	)		(6,567	)
Balance as of June 30, 2023(1)		23,903			2			434,198		(1,013	)		(535,145	)		(101,958	)
Issuance of common stock upon exercise of stock options(1)		171			1			17		—			—			18
Issuance of common stock from convertible promissory notes conversion(1)		1			—			—		—			—			—
Stock-based compensation		—			—			3		—			—			3
Foreign currency translation adjustment		—			—			—		537			—			537
Net loss		—			—			—		—			(4,346	)		(4,346	)
Balance as of September 30, 2023(1)		24,075		$	3		$	434,218	$	(476	)	$	(539,491	)	$	(105,746	)

(1)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)


	Nine Months Ended September 30,
	2024			2023
Operating activities:
Net loss	$	(7,407	)	$	(12,306	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		528			654
Operating lease right-of-use amortization		463			581
Stock-based compensation		2,119			8
Issuance of common stock to underwriter		667			—
Change in credit loss allowance		(547	)		793
Change in fair value of convertible promissory notes		1,354			(1,116	)
Change in fair value of warrant liabilities		(2,761	)		—
Loss from initial recognition of common stock forward liability		586			—
Gain on extinguishment of liability		(14,636	)		—
Changes in operating assets and liabilities:
Accounts receivable		(895	)		(3,290	)
Inventory		(1,624	)		1,816
Contract assets		(1,659	)		(1,984	)
Prepaid expenses and other current assets		(21	)		785
Other assets		70			87
Accounts payable		(2,328	)		(744	)
Contract liabilities		463			16
Accrued and other current liabilities		(3,040	)		7,387
Net defined benefit liabilities		674			328
Income tax payable		35			(135	)
Lease liabilities		(455	)		(797	)
Other liabilities		(275	)		(3	)
Net cash used in operating activities		(28,689	)		(7,920	)
Investing activities:
Purchases of property and equipment		(185	)		(284	)
Net cash used in investing activities		(185	)		(284	)
Financing activities:
Proceeds from reverse recapitalization and PIPE Financing, net of transaction costs		17,238			—
Proceeds from issuance of convertible promissory notes		16,290			—
Proceeds from issuance of common stock under common stock purchase agreement		7,814			—
Proceeds from issuance of common stock and common stock warrants in a private placement		2,240			—
Proceeds from borrowings		3,696			7,604
Proceeds from exercise of stock options		13			23
Repayments of borrowings		(14,065	)		(23	)
Repayments of convertible promissory notes		(1,630	)		—
Payments of financial lease liabilities		—			(13	)
Net cash provided by financing activities		31,596			7,591
Effect of exchange rate changes on cash and cash equivalents		(1,168	)		(665	)
Net increase (decrease) in cash and cash equivalents		1,554			(1,278	)
Cash and cash equivalents at beginning of period		258			1,398
Cash and cash equivalents at end of period	$	1,812		$	120
Supplemental disclosure of cash flow information:
Cash paid for interest	$	3,059		$	1,515
Cash paid for income taxes	$	212		$	47
Cash paid for operating leases	$	562		$	797
Non-cash financing activities:
Issuance of common stock from conversion of convertible promissory notes	$	41,209		$	72
Settlement of common stock forward liability in equity	$	135		$	—
Proceeds from issuance of common stock withheld for outstanding payables	$	975		$	—
Operating lease right-of-use assets obtained in exchange for operating lease liabilities	$	54		$	1,473

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed 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, B2B and consumer applications.

On March 26, 2024 (the “Closing Date” or “Closing”), 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 (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. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represent the accounts of Legacy GCT. Subsequent to the Business Combination, the shares and net loss per common share information prior to the Closing have been retroactively restated as shares reflecting the exchange ratio established in 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. See Note 3 for additional information.

Liquidity

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. Through September 30, 2024, the Company has incurred operating losses and negative cash flows from operating activities and had an accumulated deficit of $557.1 million as of September 30, 2024. The Company’s existing sources of liquidity as of September 30, 2024 include cash and cash equivalents of $1.8 million. The Company has historically funded operations primarily with issuances of capital stock and the incurrence of debt.

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 September 30, 2024, the Company received $7.8 million in net proceeds under the Purchase Agreement.

Management believes that the available financing under the Purchase Agreement and other capital resources available to the Company, including future sales of products and services, will be sufficient to fund the Company’s operations for at least 12 months after the filing date of this Quarterly Report on Form 10‑Q. 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. There can be no assurance that such additional debt or equity financing will be available on terms acceptable to the Company or at all.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

2. Summary of Significant Accounting Policies and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The unaudited condensed 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 unaudited condensed 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 interim financial information. Certain information and disclosures normally included in unaudited consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Accordingly, these interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended December 31, 2023, which are included in the Company’s Form 8‑K filed with the SEC on April 1, 2024. The information as of December 31, 2023 included in the condensed consolidated balance sheets was derived from the audited consolidated financial statements. Certain amounts reported in the audited consolidated financial statements for the year ended December 31, 2023 have been reclassified to conform to the current year’s presentation.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial information. The unaudited condensed consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024 or for any other future annual or interim period.

Use of Estimates

The preparation of the accompanying unaudited condensed 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, common stock of Legacy GCT prior to the reverse recapitalization, 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.

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 amount of the liabilities for the convertible promissory notes and the historical convertible promissory notes (see Note 5) represents their fair value. 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:


Level 1		Unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2		Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3		Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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 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 unaudited condensed consolidated operating results due to the abovementioned 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 determined that provisions for credit losses of approximately $1.1 million and $1.6 million were necessary as of September 30, 2024 and December 31, 2023, respectively.

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%:


Customer	September 30, 2024			December 31, 2023
Customer A		27	%		—	%
Customer H		20	%		19	%
Customer I		12	%		14	%
Customer J		12	%		27	%
Customer K		—	%		10	%

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The following table includes customers that individually accounted for more than 10% of the Company’s net revenues in the periods indicated:


	Three Months Ended September 30,						Nine Months Ended September 30,
Customer	2024			2023			2024			2023
Customer A		—	%		—	%		27	%		—	%
Customer B		24	%		—	%		25	%		—	%
Customer C		—	%		—	%		12	%		—	%
Customer D		—	%		—	%		—	%		25	%
Customer F		—	%		13	%		—	%		13	%
Customer H		57	%		—	%		20	%		—	%
Customer I		—	%		24	%		—	%		—	%
Customer J		—	%		47	%		—	%		20	%

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.

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 loss within stockholders’ deficit. Gains and losses resulting from transactions denominated in a currency other than the functional currency are included in other income (expenses), net in the unaudited condensed consolidated statements of operations. The Company recognized foreign currency exchange losses of $1.1 million and gains of $0.8 million for the three and nine months ended September 30, 2024, respectively. The Company recognized $0.9 million and $1.8 million of foreign currency exchange gains for the three and nine months ended September 30, 2023, respectively.

Convertible Promissory Notes

The Company has elected the fair value option to account for its outstanding convertible promissory notes. Changes in the estimated fair value of the outstanding convertible promissory notes are recognized in other income (expenses), net in the condensed consolidated statements of operations.

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 recognized in other income (expenses), net in the unaudited condensed 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 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.

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 unaudited condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Recent Accounting Pronouncements Adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020‑06, Debt—Debt with Conversion and Other Options (Subtopic 470‑20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815‑40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020‑06 reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification. The Company adopted this guidance effective January 1, 2024 and noted no material impact on the Company’s unaudited condensed consolidated financial statements.

In October 2021, the FASB issued ASU 2021‑08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), which provides an exception to fair value measurement for contract assets and contract liabilities related to revenue contracts acquired in a business combination. ASU 2021-08 requires an acquirer to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. The Company adopted this guidance effective January 1, 2024 and noted no material impact on the Company’s unaudited condensed consolidated financial statements.

In June 2022, the FASB issued ASU 2022‑03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring the fair value of the equity security and cannot be recognized as a separate unit of account. ASU 2022-03 also requires the investor to disclose the fair value of equity securities subject to contractual sale restrictions, the nature and remaining duration of the restrictions, and the circumstances that could cause a lapse in the restrictions. ASU 2022-03 is effective for annual and interim periods beginning after December 15, 2024, with early adoption permitted. The Company retrospectively adopted this guidance effective July 1, 2024 and noted no material impact on the Company’s unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the effect of the adoption of ASU 2023-07 on its unaudited condensed consolidated financial statements.

In December 2023, the FASB issued 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 annual periods beginning after December 15, 2024, 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 unaudited condensed consolidated financial statements.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

3. Reverse Recapitalization

In connection with the Business Combination described in Note 1, 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, restricted stock units (“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 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”).

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

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.

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 are legally outstanding and remain unvested through September 30, 2024. 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 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 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. No adjustments to the stockholders' deficit are required upon the forfeiture of the share-based awards that contain market conditions.

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GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

4. Disaggregation of Revenue

All product revenue presented in the condensed consolidated statement 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):


	Three Months Ended September 30,					Nine Months Ended September 30,
	2024		2023			2024		2023
South Korea	$	1,500	$	4		$	3,500	$	3,010
United States		837		572			2,565		2,888
Germany		46		353			916		353
China		32		3,567			167		5,133
Other		195		(20	)		195		455
Total	$	2,610	$	4,476		$	7,343	$	11,839

Contract Assets and Liabilities

Net revenues recognized during the nine months ended September 30, 2024 and 2023 for the amounts included in the contract liabilities balance at the beginning of the respective annual periods are less than $0.1 million and $0.7 million, respectively.

As of September 30, 2024 and December 31, 2023, the contract assets were $5.1 million and $3.4 million, respectively. The balances of contract liabilities related to contract fulfillment were $0.5 million and immaterial as of September 30, 2024 and December 31, 2023.

5. Fair Value of Measurements

Recurring Fair Value Measurements

The following financial instruments are measured at fair value on a recurring basis (in thousands):


	September 30, 2024
	Level 1		Level 2		Level 3		Total
Liabilities:
Convertible promissory notes	$	—	$	—	$	8,838		8,838
Warrant liabilities		—		—		3,197		3,197
Common stock forward liability		—		—		451		451

  
 December 31, 2023

  
 Level 1
  
 Level 2
  
 Level 3
  
 Total

 Liabilities:

Convertible promissory
          notes

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GCTS Wts each whole warrant exercisable one share of Common Stock