Financial Performance - Net revenues decreased by $2.8 million, or 66%, to $1.5 million for the three months ended June 30, 2024, from $4.3 million for the same period in 2023, primarily due to a $4.0 million decrease in product sales[139]. - Product sales dropped to an insignificant amount from $4.0 million for the three months ended June 30, 2023, attributed to excess LTE channel inventory and a shift in customer priorities towards 5G products[141]. - Service revenues increased by $1.2 million, or 460%, to $1.5 million for the three months ended June 30, 2024, driven by a new customer contract[140]. - Gross profit decreased by $1.9 million, or 67%, to $0.9 million for the three months ended June 30, 2024, from $2.8 million for the same period in 2023[140]. - For the six months ended June 30, 2024, net revenues decreased by $2.6 million, or 36%, to $4.7 million, primarily due to a $2.2 million decrease in product sales[147]. - For the six months ended June 30, 2024, the company reported a net loss of $1.0 million and cash used in operating activities of $24.1 million, compared to a net loss of $6.4 million and cash used of $6.4 million for the same period in 2023[155][163][164]. - Net loss improved by $5.5 million, or 84%, to $1.0 million for the three months ended June 30, 2024, from a net loss of $6.6 million for the same period in 2023[140]. Research and Development - GCT's research and development expenses are expected to increase as the company continues to grow and expand its operations as a public entity[134]. - Research and development expenses increased by $0.2 million, or 4%, to $4.2 million for the three months ended June 30, 2024, primarily related to services for designing 5G chip products[143]. - Research and development expenses for the six months ended June 30, 2024, increased by $4.8 million, or 98%, to $9.7 million, mainly due to 5G chip product development[152]. - The company expects significant ongoing operating expenditures for the manufacturing and commercialization of its first 5G chipset, anticipated in the first half of 2025[159]. Market Conditions - The semiconductor industry has experienced a downturn since late 2022, impacting GCT's business due to reduced demand and excess inventory, particularly in the 4G LTE segment[125]. - GCT anticipates a recovery in the semiconductor markets throughout 2024, although the pace of recovery remains uncertain[125]. - The company faces challenges in accurately predicting market demand and technological shifts, which are critical for the successful development of new products[123]. Financing and Liquidity - GCT Semiconductor Holding, Inc. received $17.2 million in cash proceeds from the Business Combination and PIPE Financing, net of transaction costs totaling $22.0 million[119]. - The company received $17.2 million in cash proceeds from a reverse recapitalization and PIPE Financing in March 2024, which is expected to fund operations for at least the next 12 months[156]. - Cash provided by financing activities for the six months ended June 30, 2024, was $27.9 million, primarily from proceeds of $17.2 million from the Business Combination and $16.3 million from convertible promissory notes[166]. - The company plans to use additional liquidity to finance mass production of 5G products, acquire IP, hire personnel, and improve engineering equipment[160]. - As of June 30, 2024, the company had an accumulated deficit of $549.9 million and outstanding convertible promissory notes and borrowings totaling $43.6 million, with $38.6 million due within 12 months[155][158]. Operating Expenses - GCT's sales and marketing expenses include costs related to employee compensation and advertising, which are expensed in the periods incurred[133]. - Cost of net revenues decreased by $0.9 million, or 63%, to $0.5 million for the three months ended June 30, 2024, from $1.5 million for the same period in 2023[142]. - Interest expense decreased by $2.0 million, or 72%, to $0.8 million for the three months ended June 30, 2024, due to the conversion of convertible notes[146]. Corporate Structure and Compliance - The company has undergone a reverse recapitalization, with Legacy GCT being the accounting acquirer, impacting its financial reporting going forward[118]. - The company is classified as an "emerging growth company" under the JOBS Act, allowing it to delay adopting new accounting standards until they apply to private companies[179]. - The company has elected to utilize the extended transition period for compliance with certain accounting standards, which may affect the comparability of its financial statements[179]. - The company is also defined as a "smaller reporting company" under the Exchange Act, which allows it to take advantage of scaled disclosures[180]. - The market value of the company's voting and non-voting common stock held by non-affiliates must be less than $250 million to maintain its status as a smaller reporting company[180]. - The company can continue to qualify as a smaller reporting company if its annual revenue is less than $100 million and the market value of its common stock is below $700 million[180]. - The company is not required to provide quantitative and qualitative disclosures about market risk due to its classification as a smaller reporting company[181]. Commitments and Leases - The company has various operating leases and material commitments related to research and development agreements, with expiration dates through 2026[167]. - Cash used in investing activities for the six months ended June 30, 2024, was related solely to purchases of property and equipment[165]. - The company sold 678,462 shares of common stock under a Purchase Agreement with B. Riley, receiving net proceeds of $2.8 million[157].
cord Acquisition III(CNDB) - 2024 Q2 - Quarterly Report