GCT Semiconductor Holding, Inc.(GCTS) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited condensed financial statements for Concord Acquisition Corp III as of June 30, 2022, and for the three and six-month periods then ended Condensed Balance Sheets As of June 30, 2022, the company held $352.4 million in its Trust Account, with total liabilities of $20.6 million and a stockholders' deficit of $19.2 million Condensed Balance Sheet Highlights (as of June 30, 2022) | Account | June 30, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $541,119 | $1,214,555 | | Marketable securities and cash held in Trust Account | $352,449,851 | $351,921,694 | | Total Assets | $353,550,992 | $353,856,716 | | Liabilities & Stockholders' Deficit | | | | Warrant liability | $5,863,000 | $18,655,000 | | Deferred underwriters' discount | $12,075,000 | $12,075,000 | | Total Liabilities | $20,611,504 | $36,532,165 | | Common stock subject to possible redemption | $352,118,133 | $351,900,000 | | Total Stockholders' Deficit | ($19,236,614) | ($34,575,449) | Condensed Statements of Operations (Unaudited) For the six months ended June 30, 2022, the company reported a net income of $15.6 million, primarily driven by a $15.7 million positive change in the fair value of its warrant liability and sponsor loans Condensed Statements of Operations (Unaudited) | Metric | For the Six Months ended June 30, 2022 | For the Three Months ended June 30, 2022 | | :--- | :--- | :--- | | Loss from operations | ($609,220) | ($282,565) | | Income from investments held in Trust Account | $528,157 | $418,987 | | Change in fair value of warrant liability and sponsor loans | $15,696,000 | $7,301,500 | | Net income | $15,556,968 | $7,379,953 | | Basic and diluted net income per share, Class A | $0.36 | $0.17 | | Basic and diluted net income per share, Class B | $0.36 | $0.17 | Condensed Statements of Changes in Stockholders' (Deficit) Equity (Unaudited) The company's total stockholders' deficit improved during the first six months of 2022, decreasing from ($34,575,449) to ($19,236,614), primarily due to net income - The stockholders' deficit decreased from ($34,575,449) on January 1, 2022, to ($19,236,614) on June 30, 2022[12] - The primary driver for the change in stockholders' deficit was the net income of $15,556,968 for the six-month period, which was partially offset by a $218,133 increase in the redemption value of shares subject to possible redemption[12] Condensed Statements of Cash Flows (Unaudited) For the six months ended June 30, 2022, net cash used in operating activities was ($673,436), primarily due to non-cash adjustments to net income, resulting in a cash balance decrease to $541,119 Condensed Statements of Cash Flows Highlights (Six Months ended June 30, 2022) | Cash Flow Item | Amount | | :--- | :--- | | Net income | $15,556,968 | | Adjustments (incl. change in fair value of warrant liability) | ($16,224,157) | | Net cash used in operating activities | ($673,436) | | Net change in cash | ($673,436) | | Cash, beginning of the period | $1,214,555 | | Cash, end of the period | $541,119 | Notes to Condensed Financial Statements (Unaudited) The notes detail the company's formation as a blank check company, its November 2021 IPO, and management's substantial doubt about its ability to continue as a going concern if a business combination is not completed by the deadline - The company is a blank check company formed for the purpose of effecting a business combination and had not commenced any operations as of June 30, 2022[19][20] - The company completed its Initial Public Offering (IPO) on November 8, 2021, issuing 34,500,000 units at $10.00 per unit, generating gross proceeds of $345,000,000[22][80] - Management has determined that there is substantial doubt about the Company's ability to continue as a going concern due to the mandatory liquidation requirement if a Business Combination is not consummated by May 8, 2023 (or later if extended)[40] - Warrants are accounted for as a liability at fair value, subject to re-measurement at each balance sheet date, with changes in fair value recognized in the statement of operations[65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's status as a blank check company with no operations or revenue, attributing its net income to non-operating items and reiterating substantial doubt about its going concern ability - The company is a blank check company with activities limited to organizational tasks and those necessary for its IPO, having not generated any operating revenues[137][139] Results of Operations Summary | Period | Net Income / (Loss) | Key Drivers | | :--- | :--- | :--- | | Six months ended June 30, 2022 | $15,556,968 | Change in fair value of warrant liability and sponsor loans ($15.7M), Income from investments ($0.5M) | | Period from Feb 18, 2021 to June 30, 2021 | ($473) | Formation costs | - As of June 30, 2022, the company had $541,119 in cash available for working capital purposes, held outside the Trust Account[150] - Management has determined that the mandatory liquidation provision, if a Business Combination is not consummated by the deadline (May 8, 2023, or if extended), raises substantial doubt about the Company's ability to continue as a going concern[153] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is therefore not required to provide the information under this item - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[157] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were not effective as of June 30, 2022, due to a material weakness in accounting for complex financial instruments, and has implemented changes to address this - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were not effective as of June 30, 2022[161] - The ineffectiveness was attributed to a material weakness in internal control over financial reporting concerning the accounting for complex financial instruments[161] - The company has implemented changes to its internal controls, such as enhancing access to accounting research materials and increasing consultation with third-party professionals, to address the weakness[163] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports that there are no legal proceedings - The company has no legal proceedings to report[166] Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021, and its Q1 2022 Form 10-Q - There have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021[167] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reiterates the details of the company's November 8, 2021, Initial Public Offering (IPO) of 34,500,000 units, which generated gross proceeds of $345,000,000, and the simultaneous private placement of warrants that generated an additional $9,400,000 - On November 8, 2021, the company completed its IPO of 34,500,000 Units at $10.00 per Unit, for gross proceeds of $345,000,000[168] - Simultaneously with the IPO, the company sold 9,400,000 Private Placement Warrants at $1.00 each, generating total proceeds of $9,400,000[169] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company reports no defaults upon senior securities[170] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[171] Item 5. Other Information The company reports no other information - The company has no other information to report for the period[172] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, which include officer certifications pursuant to the Sarbanes-Oxley Act and Inline XBRL data files - The exhibits filed with this report include certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[174]