What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-14 compared with 2023-11-14 · 710 added, 631 removed, 26 unchanged (98% of the section changed)

Financial Statements (Unaudited)

CONCORD ACQUISITION CORP III

CONDENSED BALANCE SHEETS

September 30, 2023

Financial Statements.

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Balance Sheets

( in thousands, except per share data)

March 31, 2024

December 31, 2023

Current assets:

Prepaid expenses

Cash and cash equivalents

Accounts receivable, net

Contract assets

Prepaid expenses and other current assets

Total current assets

Marketable securities and cash held in Trust Account

Property and equipment, net

Operating lease right-of-use assets

Intangibles, net

Liabilities and Stockholders’ Deficit

Current liabilities:

Due to related party

Accrued income taxes

Accounts payable and accrued expenses

Excise tax payable

Accounts payable

Contract liabilities

Accrued and other current liabilities

Convertible promissory notes, current

Operating lease liabilities, current

Total current liabilities

Warrant liability

Sponsor loans, at fair value

Deferred underwriters' discount

Convertible promissory notes, net of current

Net defined benefit liabilities

Long-term operating lease liabilities

Income taxes payable

Warrant liabilities

Other liabilities

Total liabilities

Commitments and Contingencies

Common stock subject to possible redemption, 4,039,934 and 34,500,000 shares at redemption value of $ 10.67 and $ 10.31 at September 30, 2023 and December 31, 2022, respectively

Commitments and contingencies (Note 8)

Stockholders’ deficit:

Preferred stock, $ 0.0001 par value;

1,000,000 shares authorized;

none issued and outstanding

Class A common stock, $ 0.0001 par value;

200,000,000 shares authorized;

0 shares issued and outstanding, excluding 4,039,934 and 34,500,000 shares subject to possible redemption at September 30, 2023 and December 31, 2022, respectively

Class B Common stock, $ 0.0001 par value;

20,000,000 shares authorized;

8,625,000 shares issued and outstanding

Preferred stock, par value $ 0.0001 per share;

40,000 and 82,352 shares authorized as of March 31, 2024 and December 31, 2023, respectively;

no shares issued and outstanding as of March 31, 2024 and December 31, 2023

Common stock, par value $ 0.0001 per share;

400,000 and 200,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively;

45,833 and 24,166 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively (1)

Additional paid-in capital (1)

Accumulated other comprehensive loss

Accumulated deficit

( 21,324,282 )

( 14,063,963 )

Total stockholders’ deficit

( 21,323,419 )

( 14,063,100 )

Total liabilities and stockholders’ deficit

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

CONCORD ACQUISITION CORP III

CONDENSED STATEMENTS OF OPERATIONS

For the Three Months Ended

For the Nine Months Ended

September 30,

Operating costs

Loss From Operations

( 3,788,909 )

Other (Expense) Income, net:

Income from operating Bank Account

Income from investments held in Trust Account

Change in fair value of warrant liability and sponsor loans

( 1,057,000 )

Total other (expense) income, net

(Loss) income before provision for income taxes

( 1,000,871 )

(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 condensed consolidated financial statements.

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Operations

(unaudited, in thousands, except per share amounts)

Three Months Ended

Net revenues:

Total net revenues

Cost of net revenues:

Total cost of net revenues

Operating expenses:

Research and development

Sales and marketing

General and administrative

Gain on extinguishment of liability

Total operating (income) expenses

Income (loss) from operations

Interest expense

Other (expenses) income, net

Income (loss) before provision for income taxes

Provision for income taxes

( 1,290,002 )

Net (loss) income

( 1,107,189 )

Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption

Basic and diluted net (loss) income per share, Class A common stock subject to possible redemption

Basic and diluted weighted average shares outstanding, Class B common stock

Basic and diluted net (loss) income per share, Class B common stock

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

CONCORD ACQUISITION CORP III

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

Preferred Stock

Net income (loss)

Net income (loss) per common share (1) :

Weighted-average shares used in computing net income (loss) per common shares (1) :

(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 condensed consolidated financial statements.

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited, in thousands)

Three Months Ended

Comprehensive income (loss), net of taxes:

Net income (loss)

Foreign currency translation adjustment

Comprehensive income (loss)

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

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Stockholders’ Deficit

(unaudited, in thousands)

Comprehensive

Stockholders’

Paid-In Capital

Balance as of January 1, 2023

( 14,063,963 )

( 14,063,100 )

Increase in redemption value of shares subject to possible redemption

( 4,450,363 )

Contribution - non-redemption agreements

Fair value of shareholder non-redemption agreements

Excise tax payable attributable to redemption of common stock

( 3,173,873 )

Balance as of June 30, 2023

( 19,818,131 )

( 19,817,268 )

Increase in redemption value of shares subject to possible redemption

( 1,107,189 )

Balance as of September 30, 2023

( 21,324,282 )

( 21,323,419 )

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

Preferred Stock

Income (Loss)

Balance as of December 31, 2023

Reverse recapitalization

Balance as of December 31, 2023 (1)

Reverse recapitalization transaction, net of transaction costs and acquired liabilities

Stock-based compensation

Foreign currency translation adjustment

Balance as of March 31, 2024

Comprehensive

Stockholders’

Paid-In Capital

Balance as of January 1, 2022

( 34,576,312 )

( 34,575,449 )

Increase in redemption value of shares subject to possible redemption

Balance as of June 30, 2022

( 19,237,477 )

( 19,236,614 )

Increase in redemption value of shares subject to possible redemption

( 1,215,425 )

Balance as of September 30, 2022

( 17,252,043 )

( 17,251,180 )

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

CONCORD ACQUISITION CORP III

CONDENSED STATEMENTS OF CASH FLOWS

For the Nine months Ended

September 30,

Cash flows from Operating Activities:

Adjustments to reconcile net income to net cash used in operating activities:

Income from investments held in Trust Account

( 6,289,385 )

( 2,116,670 )

Changes in fair value of warrant liability and sponsor loans

( 17,918,000 )

Income (Loss)

Balance as of December 31, 2022

Reverse recapitalization

Balance as of December 31, 2022 (1)

Issuance of common stock upon exercise of stock options (1)

Stock-based compensation (1)

Foreign currency translation adjustment

Balance as of March 31, 2023 (1)

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

GCT SEMICONDUCTOR HOLDING, INC.

Condensed Consolidated Statements of Cash Flows

(unaudited, in thousands)

Three Months Ended March 31,

Operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization

Operating lease right-of-use amortization

Finance lease right-of-use amortization

Stock-based compensation

Provision for credit losses

Gain on extinguishment of liability

Change in valuation of convertible promissory notes

Change in valuation of warrant liabilities

Changes in operating assets and liabilities:

Prepaid expenses

Due to related party

Accrued income taxes

Accounts payable and accrued expenses

Accounts receivable

Contract assets

Prepaid expenses and other current assets

Accounts payable

Contract liabilities

Accrued and other current liabilities

Net defined benefit liabilities

Income tax payable

Lease liabilities

Other liabilities

Net cash used in operating activities

( 2,219,226 )

Cash flows from Investing Activities:

Cash withdrawn from Trust Account to pay taxes

Cash withdrawn from Trust Account in connection with redemptions

Net cash provided by investing activities

Cash flows from Financing Activities:

Redemption of Common Stock

( 317,387,323 )

Net cash used in financing activities

( 317,387,323 )

Net change in cash

Cash, beginning of the period

Cash, end of the period

Investing activities:

Purchases of property and equipment

Net cash used in investing activities

Financing activities:

Proceeds from exercise of stock options

Proceeds from bank borrowings

Proceeds from issuance of convertible promissory notes

Proceeds from reverse recapitalization and PIPE Financing, net of transaction costs

Repayment of bank borrowings

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents cash at end of year

Supplemental disclosure of cash flow information:

Non-cash financing transactions:

Increase in redemption value of shares subject to possible redemption

Non-cash contribution - non-redemption agreements

Excise tax payable attributable to redemption of common stock

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

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Note 1 — Organization, Business Operations and Liquidity

Organization and General

Concord Acquisition Corp III (the “Company”) is a blank check company incorporated on February 18, 2021, as a Delaware corporation formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).

As of September 30, 2023, the Company had not commenced any operations.

All activity for the period from February 18, 2021 (inception) through September 30, 2023, relates to the Company’s formation, the Initial Public Offering (as defined below) and, subsequent to the Initial Public Offering, identifying a target company for a Business Combination.

The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.

The Company will generate non-operating income in the form of investment income on cash and cash equivalents from the proceeds derived from the Initial Public Offering, and non-operating income or expense from the changes in the fair value of warrant liability and sponsor loans.

The Company’s sponsors are Concord Sponsor Group III LLC (the “Sponsor”) (an affiliate of Atlas Merchant Capital LLC), and CA2 Co-Investment LLC (an affiliate of one of the underwriters of the Initial Public Offering) (“CA2 Co-Investment” and, together with the Sponsor, the “Sponsors”).

The registration statements for the Initial Public Offering were declared effective by the U.S.

Securities and Exchange Commission (the “SEC”) on November 3, 2021 (the “Effective Date”).

On November 8, 2021, the Company completed its initial public offering (the “Initial Public Offering” or “IPO”) of 34,500,000 units (“Units”), including the issuance of 4,500,000 Units as a result of the underwriters’ exercise in full of their over-allotment option at an offering price of $ 10.00 per Unit, generating gross proceeds of $ 345,000,000 .

Simultaneously with the closing of the IPO, the Company consummated the private placement of 8,260,606 warrants to the Sponsor and 1,139,394 warrants to CA2 Co-Investment (together, the “Private Placement Warrants”), each at a price of $ 1.00 per Private Placement Warrants, generating total proceeds of $ 9,400,000 .

The Company also executed promissory notes with the Sponsors, evidencing loans to the Company in the aggregate amount of $ 6,900,000 (the “Sponsors Loans”).

The Sponsor Loans may, by their terms, be repaid or converted into warrants (the “Sponsor Loan Warrants”) at a conversion price of $ 1.00 per warrant, at the Sponsors’ discretion.

The Sponsor Loan Warrants will be identical to the Private Placement Warrants, which are described in Note 5.

The Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80 % of the net balance in the Trust Account (as defined below) (excluding the amount of deferred underwriting discounts held and taxes payable on the income earned on the Trust Account) at the time of the signing an agreement to enter into a Business Combination.

However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50 % or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

There is no assurance that the Company will be able to successfully effect a Business Combination.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Upon the closing of the Initial Public Offering, a total of $ 351,900,000 ($ 10.20 per Unit) of the net proceeds from the IPO, the Private Placement and the Sponsor Loans was deposited in a trust account (“Trust Account”) and was invested only in U.S.

government treasury bills with a maturity of 185 days or less or in money market funds investing solely in U.S.

Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act.

Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company as described below, the funds held in the Trust Account will not be released from the Trust Account until the earliest of:

(1) the completion of the initial Business Combination;

(2) the redemption of any public shares properly submitted in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the Company’s obligation to provide for the redemption of the public shares in connection with the initial Business Combination or to redeem 100 % of the public shares if the Company does not complete the initial Business Combination by the Current Extended Date (as defined below) or (ii) with respect to any other provisions relating to stockholders’ rights or pre-initial Business Combination activity;

and (3) the redemption of all of the public shares if the Company has not completed the initial Business Combination by the Current Extended Date, subject to applicable law.

The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors, if any, which could have priority over the claims of the public stockholders.

The Company will provide its public stockholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either:

(1) in connection with a stockholder meeting called to approve the Business Combination;

or (2) by means of a tender offer.

Except as required by applicable law or stock exchange rules, the decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer will be made by the Company, solely in its discretion.

The public stockholders will be entitled to redeem all or a portion of their public shares upon the completion of the initial Business Combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the initial Business Combination, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares, subject to the limitations.

As of September 30, 2023, the amount in the Trust Account available for redemption is approximately $ 10.67 per public share.

All of the public shares contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with the initial Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation.

The shares of common stock subject to redemption were recorded at redemption value and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with FASB ASC Topic 480, “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination, among other things, if the Company seeks stockholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.

In April 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO (the “Non-Redeemed Shares”) in connection with the special meeting of stockholders called by the Company and held on May 4, 2023 (described below).

In exchange for the foregoing commitments not to redeem such shares, the Sponsor has agreed to transfer to such stockholders an aggregate of 999,665 shares of the Company’s Class B common stock (the “Class B shares”), par value $ 0.0001 per share, held by the Sponsor immediately following consummation of an initial business combination.

On May 4, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s amended and restated certificate of incorporation (the “charter”) to extend the date by which the Company has to consummate a business combination from May 8, 2023 (the “Termination Date”) to November 8, 2023, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Extended Date”).

In connection with the votes to approve the Charter Amendment, the holders of 30,460,066 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $ 10.42 per share, for an aggregate redemption amount of approximately $ 317,000,000 , leaving approximately $ 42,000,000 in the Trust Account.

In November 2023, the Company and the Sponsor entered into certain Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO in connection with the special meeting of stockholders called by the Company and held on November 7, 2023 (described below).

In exchange for the foregoing commitments not to redeem such shares, the Company has agreed to allocate to such investors an aggregate of 782,001 shares

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

of Class A common stock (the “Promote Shares”) and the Sponsor has agreed to surrender and forfeit to the Company for no consideration a number of shares of Class B common stock equal to the number of Promote Shares upon closing of an initial business combination.

On November 7, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to further extend the date by which the Company has to consummate a Business Combination from the Extended Date to August 8, 2024, or such earlier date as may be determined by the board of directors of the Company (such later date, the “Current Extended Date”).

In connection with the votes to approve such a proposal, the holders of an additional 98,573 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $ 10.70 per share, for an aggregate redemption amount of approximately $ 1.1 million, leaving approximately $ 42.2 million in the Trust Account and 3,941,361 shares of Class A common stock subject to possible redemption outstanding immediately following these redemptions.

Proposed Business Combination

On November 2, 2023, the Company entered into a business combination agreement (the “Business Combination Agreement”) with GCT Semiconductor, Inc., a Delaware corporation (“GCT”), and Gibraltar Merger Sub Inc., a Delaware corporation and a direct, wholly-owned subsidiary of the Company (“Merger Sub”).

Pursuant to the Business Combination Agreement, the parties will, subject to the satisfaction or waiver of the conditions contained in the Business Combination Agreement, consummate a business combination transaction pursuant to which Merger Sub will merge with and into GCT, with GCT surviving the merger as a wholly-owned subsidiary of the Company (the “Merger” and, together with the other transactions contemplated by the Business Combination Agreement, the “Transactions” and the closing of the Transactions, the “Closing”).

The aggregate equity consideration to be paid to GCT’s stockholders and other equity holders in the Transactions (the “Aggregate Transaction Consideration”) will be equal to the quotient of (i) the Company Value (as defined below) divided by (ii) $ 10.00 .

Immediately prior to the Closing, all of the outstanding principal and accrued interest under the outstanding promissory notes issued by GCT that can be converted into shares of GCT common stock will be so converted in accordance with their terms.

The “Company Value” means an amount equal to $ 350 million, minus the amount of indebtedness of GCT immediately prior to the Closing, plus the amount of GCT’s cash and cash equivalents immediately prior to the Closing (with standard exceptions), plus the aggregate exercise price of all “in-the-money” warrants of GCT outstanding immediately prior to the Closing.

Following the Closing, the Company will issue up to an aggregate of 20,000,000 additional shares of its common stock to the stockholders of GCT as of immediately prior to the Closing and certain other persons, including the PIPE Investors (as defined below) (collectively, the “GCT Recipients”), if the volume weighted average price (the “VWAP”) of the shares of the Company’s common stock equals or exceeds certain minimum share prices at any time during the period starting 60 days following the Closing and expiring on the fifth anniversary of the Closing (the “Earnout Period”), as follows:

(i) 6,666,667 shares if the VWAP of the shares of the common stock equals or exceeds $ 12.50 for any 20 trading days within a period of 30 consecutive trading days during the Earnout Period;

(ii) 6,666,666 shares if the VWAP of the shares of the common stock equals or exceeds $ 15.00 for any 20 trading days within a period of 30 consecutive trading days during the Earnout Period;

and (iii) 6,666,667 shares if the VWAP of the shares of the common stock equals or exceeds $ 17.50 for any 20 trading days within a period of 30 consecutive trading days during the Earnout Period.

Such shares will also become issuable under certain circumstances if a “change of control” of the Company occurs following the Closing but prior to the applicable earnout expiration date and the price per share in the change of control equals or exceeds the applicable price target.

Concurrently with the execution of the Business Combination Agreement, certain investors (the “PIPE Investors”) entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors have committed to purchase in a private placement an aggregate of 4,484,854 shares of the Company’s Class A common stock (the “PIPE Shares”) at a purchase price of $ 6.67 per share and an aggregate purchase price of approximately $ 29.9 million (the “PIPE Investment”).

The purchase of the PIPE Shares is conditioned upon, among other things, the consummation of the Transactions and will be consummated immediately prior to or substantially concurrently with the Closing.

The public warrants included as part of Units sold in the IPO (the “Public Warrants”) and Private Placement Warrants include certain down-round provisions under which their exercise price may be adjusted, if (a) the Company issues additional shares of the Company’s Class A common stock or securities convertible into or exercisable or exchangeable for shares of the Company’s Class A common stock for capital raising purposes in connection with the closing of its initial business combination at an issue price or effective issue price of less than $ 9.20 per share of the Company’s Class A common stock (the “Newly

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Issued Price”), (b) the aggregate gross proceeds from such issuances represent more than 60 % of the total equity proceeds, and interest thereon, available for the funding of an initial business combination on the date of the consummation of such initial business combination (net of redemptions), and (c) the volume weighted average trading price of the the Company’s Class A common stock during the twenty (20) trading day period starting on the trading day prior to the day on which the Company consummates an initial business combination (such price, the “Market Value”) is below $ 9.20 per share, the price per share (including in cash or by payment of warrants pursuant to a “cashless exercise,” to the extent permitted) at which shares of the Company’s Class A common stock may be purchased at the time a warrant is exercised will be adjusted (to the nearest cent) to be equal to 115 % of the higher of the Market Value and the Newly Issued Price, and the $ 18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180 % of the higher of the Market Value and the Newly Issued Price.

Concurrently with the execution of the Business Combination Agreement, the Company entered into a sponsor support agreement (the “Sponsor Support Agreement”) with GCT, the Sponsor and CA2 Co-Investment LLC (“CA2”).

Pursuant to the Sponsor Support Agreement, the Sponsor and CA2 have, among other things, agreed to vote all of their shares of the Company’s common stock in favor of the approval of the Transactions, including the Merger, not to redeem any of their shares of the Company’s common stock and to waive their anti-dilution protections with respect to their shares of the Company’s Class B common stock.

In addition, the Sponsor and CA2 agreed that a portion of up to an aggregate of 1,920,375 shares of common stock to be issued to them at Closing (collectively, the “Sponsor Earnout Shares”) will be unvested and subject to forfeiture as of the Closing, and will only vest if certain share price trading thresholds are satisfied during a specified period of time following the Closing.

The Sponsor and CA2 further agreed that (i) 1,399,107 shares of common stock to be held by them at Closing, (ii) any portion of the Sponsor Earnout Shares not unvested and made subject to forfetiture as of the Closing and (iii) up to an aggregate of 2,820,000 Private Placement Warrants to be held by them at Closing may be allocated by GCT to the GCT Recipients, and transferred to the GCT Recipients at Closing (without any vesting conditions).

The Sponsor and CA2 also agreed (i) to forfeit up to an additional 2,820,000 Private Placement Warrants held by them at Closing, to the extent not allocated prior to the Closing to certain third parties, including prospective PIPE Investors and holders of shares of the Company’s Class A common stock who agree not to redeem their shares in connection with any extension of the Company’s deadline to consummate an initial business combination, and (ii) to forgive all amounts outstanding under the Sponsor Loans.

Initial Business Combination

The Company has until the Current Extended Date (the “Combination Period”) to complete the initial Business Combination.

If the Company is unable to complete the initial Business Combination within the Combination Period or during any Extension Period (as defined below), the Company will:

(1) cease all operations except for the purpose of winding up;

(2) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account (which interest shall be net of taxes payable, and less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), (3) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

There will be no redemption rights or liquidating distributions with respect to their warrants, which will expire worthless if the Company fails to complete the initial Business Combination within the Combination Period.

The Sponsors, officers and directors have agreed to waive:

(1) their redemption rights with respect to any Founder shares (as described in Note 5) and public shares held by them, as applicable, in connection with the completion of the initial Business Combination;

(2) their redemption rights with respect to any Founder shares and public shares held by them in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify the substance or timing of the obligation to allow redemptions in connection with the initial Business Combination or to redeem 100 % of the public shares if the Company has not consummated the initial Business Combination within the Combination Period or (B) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity;

and (3) their rights to liquidating distributions from the Trust Account with respect to any Founder shares they hold if the Company fails to complete the initial Business Combination within the Combination Period or during any extended time that the Company has to consummate a Business Combination beyond the Combination Period as a result of a stockholder vote to amend the Company’s amended and restated certificate of incorporation (an

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

“Extension Period”) (although they will be entitled to liquidating distributions from the Trust Account with respect to any public shares they hold if the Company fails to complete the initial Business Combination within the Combination Period).

The Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below:

(1) $ 10.20 per public share;

or (2) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”).

Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsors will not be responsible to the extent of any liability for such third-party claims.

The Company has not independently verified whether the Sponsor has sufficient funds to satisfy its indemnity obligations and believe that the Sponsor’s only assets are securities of the Company and, therefore, the Sponsor may not be able to satisfy those obligations.

The Company has not asked the Sponsor to reserve for such obligations.

Liquidity and Going Concern Considerations

As of September 30, 2023, the Company had cash on hand of $ 212,936 held outside of the Trust Account and available for working capital purposes (which included $ 203,663 of cash withdrawn by the Company from the Trust Account to pay taxes not yet paid and excluding excise taxes).

Further, investment income on the funds held in the Trust Account may be released to the Company to pay taxes (excluding excise taxes) and up to $ 100,000 to pay dissolution expenses.

During the nine months ended September 30, 2023, the Company withdrew $ 1,911,013 from the Trust Account for the payment of taxes.

If the estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, the Company may have insufficient funds available to operate our business prior to a Business Combination.

Moreover, the Company may need to obtain additional financing either to complete a Business Combination or because the Company becomes obligated to redeem a significant number of public shares upon consummation of a Business Combination, in which case the Company may issue additional securities or incur debt in connection with such Business Combination.

Subject to compliance with applicable securities laws, the Company would only complete such financing simultaneously with the completion of a Business Combination.

If the Company is unable to complete a Business Combination because it does not have sufficient funds available, the Company will be forced to cease operations and liquidate the Trust Account.

In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.

The Company has until the Current Extended Date to consummate a Business Combination.

If a Business Combination is not consummated by this date and any additional extension(s) are not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company.

Although the Company intends to consummate a Business Combination on or before the Current Extended Date, it is uncertain whether the Company will be able to consummate a Business Combination by this time.

In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, Management has determined that the mandatory liquidation, should a Business Combination not occur, and an additional extension is not obtained, and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate its business prior to a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts and classification of assets or liabilities should the Company be required to liquidate after the Current Extended Date.

Risks and Uncertainties

Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position or search for a target company, the specific impact is not readily determinable as of the date of these financial statements.

The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Note 2 — Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8-03 of Regulation S-X of the SEC.

Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting.

Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows.

In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 27, 2023, which contains the audited financial statements and notes thereto.

The accompanying condensed balance sheet as of December 31, 2022 has been derived from those audited financial statements.

The interim results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any future interim periods.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified by the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Cash paid for interest

Cash paid for income taxes

Cash paid for amounts included in the measurement of operating leases

Issuance of common stock from conversion of convertible promissory notes and accrued interest

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

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Organization and Liquidity

Description of Business

GCT Semiconductor Holdings, 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 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.

(hereinafter referred to as “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 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.

Pursuant to the Business Combination Agreement, the shares and net loss per common share 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.

See Note 3 for additional information.

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.

The accompanying 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.

Prior to March 31, 2024, the Company has incurred operating losses and negative cash flows from operating and had an accumulated deficit of $ 548.9 million as of March 31, 2024.

The Company’s existing sources of liquidity as of March 31, 2024 include cash and cash equivalents of $ 16.1 million.

The Company has historically funded operations primarily with issuances of capital stock and the incurrence of debt.

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.

The Company believes the proceeds received in connection with the Business Combination and other capital resources available to the Company , including sales of products and services and the Purchase Agreement (as defined in Note 17), will be sufficient to fund the Company’s operations for at 12 months after the filing date of this Quarterly Report on Form 10-Q.

Over the longer term, the Company will need to raise additional capital through debt or equity financing to fund future operations until it generates positive cash flows from profitable operations.

There can be no assurance that such additional debt or equity financing will be available on terms acceptable to the Company, or at all.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Summary of Significant Accounting Policies and Basis of Presentation

Principles of Consolidation and Basis of Presentation

The 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 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 consolidated financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted.

Accordingly, these interim 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 those audited consolidated financial statements.

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 condensed consolidated results of operations for the three months ended March 31, 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 financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.

Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.

The Company did no t have any cash equivalents as of September 30, 2023 and December 31, 2022.

At September 30, 2023 and December 31, 2022, included in cash on the condensed balance sheets is $ 203,663 and $ 0 , respectively, of cash withdrawn by the Company from the Trust Account to pay taxes not yet paid and excluding excise taxes.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Marketable Securities and Cash Held in Trust Account

As of September 30, 2023 and December 31, 2022, investments held in Trust Account consisted of mutual funds that invest primarily in US government securities and generally have a readily determinable fair value.

Such securities and investments in mutual funds are presented on the condensed balance sheets at fair value at the end of the reporting period.

Interest, dividends, gains and losses resulting from the change in fair value of these securities are included in income from investments held in the Trust Account in the accompanying condensed statements of operations.

The estimated fair values of investments held in the Trust Account are determined using available market information.

A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value.

The impairment is charged to earnings and a new cost basis for the security is established.

To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary.

Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

During the nine months ended September 30, 2022, premiums and discounts were amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method.

Such amortization and accretion is included in the “income from investments held in Trust Account” line item in the condensed statement of operations.

Accretion of the discounts amounted to $ 320,031 and $ 0 for the nine and three months ended September 30, 2022, respectively.

There were no such securities held with discounts or premiums during the nine and three months ended September 30, 2023, and as a result there was no accretion during such periods.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000.

At September 30, 2023 and December 31, 2022, the Company has not experienced losses on this account.

Common Stock Subject to Possible Redemption

The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and is measured at fair value.

Conditionally redeemable shares of Class A common stock (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

At all other times, shares of Class A common stock are classified as stockholders’ equity.

The Company’s shares of Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.

Accordingly, all shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheet.

The shares of Class A common stock sold as part of the Units in the IPO contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a shareholder vote or tender offer in connection with a Business Combination and in connection with certain amendments to the Company’s amended and restated certificate of incorporation.

In accordance with the accounting treatment for redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require Class A common stock subject to redemption to be classified outside of permanent equity.

Therefore, all shares of Class A common stock have been classified outside of permanent equity.

In connection with the votes to approve the Charter Amendment at the special meeting of stockholders on May 4, 2023, the holders of 30,460,066 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $ 10.42 per share, for an aggregate redemption amount of approximately $ 317,000,000 .

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

In connection with the votes to approve the Second Charter Amendment at the special meeting of stockholders on November 7, 2023, the holders of 98,573 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $ 10.70 per share, for an aggregate redemption amount of approximately $ 1.1 million.

See “Note 7 – Subsequent Events.”

The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period.

Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid-in capital (to the extent available) and accumulated deficit.

During the nine months ended September 30, 2023, the Company recorded an increase in the redemption value of $ 4,849,325 as a result of earnings on the Trust Account that exceed amounts eligible for payment of taxes that had been incurred.

During the nine months ended September 30, 2023, $ 1,911,013 was withdrawn by the Company from the Trust Account to pay its tax obligations.

For the nine months ended September 30, 2023 and 2022, the changes in Class A common stock subject to possible redemption is as follows:

Class A common stock subject to possible redemption at January 1, 2022

Increase in redemption value of shares subject to possible redemption

Class A common stock subject to possible redemption at September 30, 2022

Class A common stock subject to possible redemption at January 1, 2023

Increase in redemption value of shares subject to possible redemption

Decrease due to share redemption

( 30,460,066 )

( 317,387,323 )

Class A common stock subject to possible redemption at September 30, 2023

The preparation of the accompanying 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, inventory obsolescence, recoverability of long-lived assets, certain accrued expenses, stock-based compensation, determination of fair value of the Company’s convertible promissory notes, common stock (prior to the reverse recapitalization), warrant labilities and stock options, and deferred income taxes including related valuation allowances.

The Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under the circumstances.

However, actual results could differ from these estimates, and these differences may be material.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under the FASB ASC 820, “Fair Value Measurement” approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature.

Fair Value Measurements

Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date.

GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

These tiers include:

● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;

● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active;

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy.

In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.

Derivative Financial Instruments

The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”.

Derivative instruments are initially recorded at fair value on the grant date and re-valued at each reporting date, with changes in the fair value reported in the statement of operations.

Derivative assets and liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.

Warrant Liability

The Company accounts for the 26,650,000 warrants issued in connection with the Initial Public Offering (the 17,250,000 Public Warrants and the 9,400,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

Accordingly, the Company classifies each warrant as a liability at its fair value.

This liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s condensed statement of operations.

Sponsor Loans

The Company has elected to account for the $ 6,900,000 (original principal amount) in Sponsor Loans using the fair value option in accordance with the guidance contained in ASC 825-10-25.

The fair value option provides an option to elect fair value as an alternative measurement for selected financial assets, financial liabilities, unrecognized firm commitments, and written loan commitments.

The Company has elected to apply the fair value option to the Sponsor Loans to simplify the accounting model applied to that class of financial instruments.

See Notes 3 and 6 for additional information.

Stock-Based Compensation

The sale or transfers of the Founder Shares to members of the Company’s board of directors, as described in Note 5, is within the scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”).

Under ASC 718, stock-based compensation associated with equity classified awards is measured at fair value upon the grant date.

The Founder Shares were effectively sold or transferred subject to a performance condition (i.e., the occurrence of a Business Combination).

Compensation expense related to the Founder Shares is recognized only when the performance condition is probable of occurrence under the applicable accounting literature in this circumstance.

A business combination is not probable until it is completed.

Stock-based compensation would be recognized at the date a Business Combination is considered probable in an amount equal to the number of Founder Shares times the grant date fair value per share (unless subsequently modified) less the amount initially received for the purchase of the Founder Shares.

As of September 30, 2023 and for all prior periods, the Company determined that a Business Combination is not considered probable until a business combination is completed, and therefore, no stock-based compensation expense has been recognized.

The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

The effective tax rate differs from the statutory tax rate of 21 % for the nine and three months ended September 30, 2023 and 2022, primarily

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

due to changes in fair value of the warrant liability and sponsor loans, which are not currently recognized in taxable income, non-deductible start-up costs, and the valuation allowance on the deferred tax assets.

While ASC 740 identifies usage of an effective annual tax rate for purposes of an interim provision, it does allow for estimating individual elements in the current period if they are significant, unusual or infrequent.

Computing the effective tax rate for the Company is complicated due to the potential impact of the Company’s change in fair value of warrants (or any other change in fair value of a complex financial instrument), the timing of any potential business combination expenses and the actual interest income that will be recognized during the year.

The Company has taken a position as to the calculation of income tax expense in a current period based on ASC 740-270-25-3 which states, “If an entity is unable to estimate a part of its ordinary income or loss or the related tax provision or benefit but is otherwise able to make a reasonable estimate, the tax provision or benefit applicable to the item that cannot be estimated shall be reported in the interim period in which the item is reported.” The Company believes its calculation to be a reliable estimate and allows it to properly take into account the usual elements that can impact its annualized book income and its impact on the effective tax rate.

As such, the Company is computing its taxable income or loss and associated income tax provision or benefit based on actual results through September 30, 2023.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits.

There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2023, and December 31, 2022.

The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.

The Company has identified the United States as its only “major” tax jurisdiction.

The Company is subject to income tax examinations by major taxing authorities since inception.

These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws.

The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.

The Company was formed in 2021 and files U.S.

federal and various state income tax returns.

All tax periods since inception remain open to examination by the taxing jurisdictions to which the Company is subject.

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return.

For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.

The Company is subject to income tax examinations by major taxing authorities since inception.

On August 16, 2022, the Inflation Reduction Act of 2022 (the “IRA”) was signed into federal law.

The IRA provides for, among other things, a new U.S.

federal 1 % excise tax on certain repurchases (including redemptions) of stock by publicly traded U.S.

corporations and certain U.S.

subsidiaries of publicly traded non-U.S.

corporations (each, a “covered corporation”).

Because the Company is a Delaware corporation and its securities are trading on the NYSE, the Company is a “covered corporation” for this purpose.

The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased.

The amount of the excise tax is generally 1 % of the fair market value of the shares repurchased at the time of the repurchase.

However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year.

In addition, certain exceptions apply to the excise tax.

Department of Treasury has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of the excise tax.

The IRA applies only to repurchases that occur after December 31, 2022.

Any redemption or other repurchase that occurs in connection with a Business Combination may be subject to the excise tax.

Whether and to what extent we would be subject to the excise tax would depend on a number of factors, including (i) the fair market value of the

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

redemptions and repurchases in connection with a Business Combination, (ii) the timing, nature and amount of the equity issued in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination), and (iii) the content of regulations and other guidance from the U.S.

Department of the Treasury.

In addition, because the excise tax would be payable by the Company, and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined.

The foregoing could cause a reduction in the cash available on hand to complete a Business Combination.

For the nine months ended September 30, 2023 and 2022, the Company has recognized $ 3,173,873 and $ 0 , respectively, in excise tax payable related to share redemptions.

In accordance with ASC 340-10-S99-1, the liability does not impact the condensed statements of operations and is offset against additional paid-in capital or accumulated deficit if additional paid-in capital is not available.

Net (Loss) Income Per Common Share

The Company has two classes of shares, which are referred to as Class A common stock and Class B common stock.

Earnings and losses are shared pro rata between the two classes of stock.

For purposes of computing diluted earnings per share, the weighted-average shares outstanding of common stock reflects the dilutive effect that could occur if convertible securities or other contracts to issue common stock were converted into or exercised for common stock as of the beginning of the period in which the conditions were satisfied (or as of the date of the contingent stock agreement, if later).

The calculation of diluted net (loss) income per share does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of over-allotment (iii) Private Placement and (iv) sponsor loans since the exercise of the warrants and sponsor loans would be anti-dilutive.

The warrants (including warrants issuable in conjunction with the Sponsor Loans) are exercisable to purchase 33,550,000 shares of Class A common stock in the aggregate.

At September 30, 2023 and September 30, 2022, the Company did not have any other dilutive securities and other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company.

Remeasurement associated with the redeemable shares of Class A common stock to redemption value is excluded from earnings per share as the redemption value approximates fair value.

Net (loss) income per common share is as follows:

For the Three Months Ended September 30,

Basic and diluted net (loss) income per share

Allocation of net (loss) income

Weighted-average shares outstanding

Basic and diluted net (loss) income per share

For the Nine months Ended September 30,

Basic and diluted net income per share

Allocation of net income

Weighted-average shares outstanding

Basic and diluted net income per share

Recent Accounting Pronouncements

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No.

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

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for the derivative scope exception, and it simplifies the diluted earnings per share calculation in certain areas.

The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2023, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.

The Company is currently evaluating the impact of ASU 2020-06 on its financial statements.

The Company’s management does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.

Non-Redemption Agreements

In April 2023, the Sponsor and certain investors (“Investors”) of the Company’s Class A common stock entered into Non-Redemption Agreements.

The Non-Redemption Agreements provide for the assignment of economic interest of an aggregate of 999,665 shares of Class B common stock of the Company held by the Sponsor to the Investors in exchange for such Investors agreeing to hold and not redeem their Class A common stock at the special meeting of stockholders held on May 4, 2023.

Pursuant to the Non-Redemption Agreements, the Sponsor has agreed to transfer to such Investors an aggregate of 999,665 shares of Class B common stock upon the consummation of an initial Business Combination.

The Company estimated the aggregate fair value of the shares attributable to the Investors to be $ 884,554 or $ 0.88 per share.

The Company complies with the requirements of SEC Staff Accounting Bulletin (“SAB”) Topic 5(A) – “Expenses of Offering” and SAB Topic 5(T):

Miscellaneous Accounting - Accounting for Expenses or Liabilities Paid by Principal Stockholder(s).

As such, the value of the Class B common stock assigned to the Investors are recognized as offering costs and charged to shareholders’ deficit.

The value of the Class B common stock contributed by the Sponsors is reported as an increase to shareholders’ deficit.

Note 3 — Related Party Transactions

Founder Shares

On March 1, 2021, the Sponsor paid $ 25,000 in exchange for 7,187,500 shares of Class B common stock (the “Founder Shares”).

On March 25, 2021, the Sponsor transferred an aggregate of 75,000 Founder Shares to three members of the board of directors (each received 25,000 Founder Shares).

The number of Founder Shares outstanding was determined based on the expectation that the total size of the Initial Public Offering would be a maximum of 28,750,000 Units if the underwriters’ over-allotment option is exercised in full, and therefore that such Founder Shares would represent 20 % of the outstanding shares after the Initial Public Offering.

On November 4, 2021, the Company’s board of directors approved the issuance of 1,437,500 additional shares of Class B common stock in the form of a stock dividend, resulting in an aggregate of 8,625,000 Class B common shares outstanding.

At November 8, 2021, the total number of Class B common shares outstanding have been adjusted to reflect the issuance of the additional shares.

The number of Founder Shares outstanding was adjusted based on the Initial Public Offering of 34,500,000 Units such that the Founder Shares would represent 20 % of the outstanding shares after the Initial Public Offering.

The issuance of 1,437,500 additional shares of Class B common stock in the form of a stock dividend has been retroactively reflected for all prior periods presented.

The Company’s initial stockholders, officers and directors have agreed not to transfer, assign or sell any Founder Shares held by them until the earlier to occur of:

(1) one year after the completion of the initial Business Combination;

and (2) subsequent to the initial Business Combination, (x) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all of the public stockholders having the right to exchange their shares of common stock for cash, securities or other property or (y) if the last reported sale price of the Class A common stock equals or exceeds $ 12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 -trading day period commencing at least 150 days after the initial Business Combination.

Any permitted transferees would be subject to the same restrictions and other agreements of the initial stockholders with respect to any Founder Shares (the “Lock-up”).

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Promissory Note — Related Party

On May 3, 2022, the Sponsor agreed to loan the Company up to $ 350,000 to be used to pay operating expenses.

This loan is non-interest bearing, unsecured, is not convertible into warrants or any other securities, and due at the closing of a business combination.

The Company had not borrowed any amount under the promissory note.

There was no balance outstanding as of both September 30, 2023 and December 31, 2022.

Sponsor Loans

The Company executed promissory notes with the Sponsors, evidencing loans to the Company in the aggregate amount of $ 6,900,000 .

The Sponsor Loans were extended in order to ensure that the amount in the Trust Account is $ 10.20 per public share upon completion of the IPO with the proceeds of the Sponsor Loans being added to the Trust Account.

The Sponsor Loans are non-interest bearing with the principal balance to be repaid or converted into warrants at a conversion price of $ 1.00 per warrant, at the Sponsors’ discretion.

All accrued and unpaid principal of the Sponsor Loans that is not converted into warrants shall continue to remain outstanding and to be subject to the terms and conditions of the Sponsor Loans and will become payable on the date the initial Business Combination is completed.

If converted, the Sponsor Loan Warrants would be identical to the Private Placement Warrants.

If the Company does not complete an initial Business Combination, the Company will not repay the Sponsor Loans from amounts held in the Trust Account, and its proceeds will be distributed to the Company’s public stockholders.

See Note 6 for additional information.

Related Party Loans

In order to finance transaction costs in connection with an intended initial Business Combination, the Sponsors, an affiliate of the Sponsors or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).

If the Company completes an initial Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account released to the Company.

Otherwise, such loans would be repaid only out of funds held outside the Trust Account.

In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used to repay such loaned amounts.

Up to $ 1,500,000 of such loans may be convertible into Private Placement Warrants of the post Business Combination entity, at a price of $ 1.00 per warrant at the option of the lender.

The warrants would be identical to the Private Placement Warrants issued to the Sponsors.

As of September 30, 2023 and December 31, 2022, no such Working Capital Loans were outstanding.

Administrative Service Fee

The Company has agreed to pay an affiliate of its Sponsor a total of $ 20,000 per month for office space, utilities and secretarial and administrative support.

Upon completion of the Company’s Business Combination or its liquidation, the Company will cease paying these monthly fees.

The Company has recognized an expense of $ 60,000 and $ 180,000 for the administrative service fee for each of the three and nine months ended September 30, 2023 and 2022, respectively, and is included in operating costs on the condensed statements of operations.

As of September 30, 2023 and December 31, 2022, the Company had $ 40,000 and $ 0 , respectively, due to the affiliate of the Sponsor related to the administrative service fee.

Due to Related Party

In the normal course of business, certain expenses of the Company may be paid by, and then reimbursed to an affiliate of the Sponsor.

As of September 30, 2023 and December 31, 2022, the Company had an outstanding balance due to the affiliate of the Sponsor of $ 44,174 and $ 10,024 , respectively.

The amount is included in due to related party on the condensed balance sheets and includes but is not limited to legal expense, expense related to identifying a target business, and other expenses.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Note 4 — Commitments and Contingencies

Registration Rights

The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Sponsor Loans or Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Sponsor Loans or Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement entered into on November 3, 2021, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A common stock).

The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company registers such securities.

In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s completion of the initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act.

The Company will bear the expenses incurred in connection with the filing of any such registration statements.

The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities.

Underwriters Agreement

The Company will pay the underwriters a deferred underwriting fee upon the consummation of an initial Business Combination in an amount equal to 3.5 % of the gross proceeds of the IPO, or $ 12,075,000 .

Capital Markets Advisor Agreement

On March 29, 2023, the Company engaged a capital markets advisor in connection with seeking an extension for completing a business combination, a possible acquisition of a third party by merger, consolidation, acquisition of stock or assets or other business combination, and as a placement agent in connection with a private placement of debt, equity, equity-linked or convertible securities.

The Company agreed to pay the capital markets advisor a transaction fee in connection with the services provided, payable upon and subject to the Company’s consummation of an initial business combination (“Capital Markets Advisor Fee”).

The fee consists of a fixed and determinable portion and a variable portion contingent upon certain future events expected to take place upon completion of a business combination.

As of September 30, 2023, $ 2,500,000 was accrued for the fee as the amount was fixed and determinable.

These costs may be paid for using the proceeds of the cash available once a business combination is complete.

Expenses Contingent on the Closing of a Business Combination

As of September 30, 2023 and 2022, the Company has incurred approximately $ 2,725,000 and $ 0 , respectively, in fees contingent on the closing of a business combination, of which $ 2,500,000 and $ 0 , respectively, is related to the Capital Markets Advisor Fee.

These costs may be paid using the proceeds of the cash available once a business combination is complete.

The amount is included in accounts payable and accrued expenses on the condensed balance sheets.

In connection with the Special Meeting, stockholders holding 30,460,066 of the Company’s Public Stock exercised their right to redeem such shares for a pro rata portion of the funds in the Trust Account for an aggregate amount of $ 317,387,323 .

As such, the Company has recorded a 1 % excise tax liability of $ 3,173,873 on the condensed balance sheet as of September 30, 2023.

Any excise tax liability payable will not be paid out of the funds in the Trust Account.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

Note 5 — Stockholders’ Deficit

Preferred Stock

The Company is authorized to issue a total of 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share.

At September 30, 2023 and December 31, 2022, there were no shares of preferred shares issued or outstanding.

Class A Common Stock

The Company is authorized to issue a total of 200,000,000 shares of Class A common stock with a par value of $ 0.0001 per share.

Holders of Class A common stock are entitled to one vote for each share.

As of September 30, 2023 and December 31, 2022, there were no shares of Class A common stock issued and outstanding, excluding 4,039,934 and 34,500,000 shares of Class A common stock subject to possible redemption, respectively, which are classified as temporary equity.

Class B Common Stock

The Company is authorized to issue a total of 20,000,000 shares of Class B common stock with a par value of $ 0.0001 per share.

Holders of the Class B common stock are entitled to one vote for each share.

As of September 30, 2023 and December 31, 2022, there were 8,625,000 shares of Class B common stock issued and outstanding.

The Company’s initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of:

(1) one year after the completion of the initial Business Combination;

Any permitted transferees would be subject to the same restrictions and other agreements of the initial stockholders with respect to any Founder Shares.

The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of the initial Business Combination on a one-for-one basis, subject to adjustment.

In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of the initial Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20 % of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including the Class A common stock issuable upon exercise of the Private Placement Warrants or any Sponsor Loan Warrants) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial Business Combination (net of the number of shares of Class A common stock redeemed in connection with the initial Business Combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial Business Combination.

In no event shall the Class B Common Stock convert into Class A Common Stock at a ratio that is less than one-for-one.

Each whole warrant entitles the holder to purchase one share of the Company’s Class A common stock at a price of $ 11.50 per share, subject to adjustment.

The warrants will expire at 5:00 p.m., New York City time on the warrant expiration date, which is five years after the completion of the initial Business Combination or earlier upon redemption or liquidation.

On the exercise of any warrant, the warrant exercise price will be paid directly to the Company and not placed in the Trust Account.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the satisfying the Company’s obligations described below with respect to registration.

No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.

In no event will the Company be required to net cash settle any warrant.

In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such Unit.

The Company did not register the shares of Class A common stock issuable upon exercise of the warrants in connection with the IPO.

However, the Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of the initial Business Combination, the Company will use its commercially reasonable efforts to file with the SEC, and within 60 business days following the initial Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed;

provided that, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of public warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.

Redemption of warrants when the price per share of Class A common stock equals or exceeds $ 18.00 .

Once the warrants become exercisable, the Company may redeem the outstanding public warrants:

● in whole and not in part;

● at a price of $ 0.01 per warrant;

● upon a minimum of 30 days ’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder;

● if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 -trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

Redemption of warrants when the price per share of Class A common stock equals or exceeds $ 10.00 .

Once the warrants become exercisable, the Company may redeem the outstanding public warrants:

● in whole and not in part;

● at a price of $ 0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock based on the redemption date and the “fair market value” of the Class A common stock (as defined below) except as otherwise described below;

● upon a minimum of 30 days ’ prior written notice of redemption

● if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ 10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;

● if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30 -day period after written notice of redemption is given.

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The “fair market value” of the Class A common stock shall mean the average last reported sale price of the Class A common stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.

This redemption feature differs from the typical warrant redemption features used in many other blank check offerings.

In no event will the warrants be exercisable in connection with this redemption feature for more than 0.361 Class A common stock per warrant (subject to adjustment).

Note 6 — Fair Value Measurement

The following table presents fair value information as of September 30, 2023 and December 31, 2022, for the Company’s assets and liabilities that are accounted for at fair value on a recurring basis and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value.

September 30, 2023

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 represents their fair value.

The carrying amounts of the Company’s bank borrowings and lease liabilities approximate fair value 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:

Unadjusted quoted prices in active markets for identical assets or liabilities.

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.

Unobservable inputs that are supported by little or no market activity for the related assets or liabilities.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The Company’s Level 3 financial instruments consist of convertible promissory notes and warrant liabilities.

These financial instruments were valued using valuation techniques that are considered to be a Level 3 fair value measurement .

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:

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 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 condensed consolidated operating results due to the factors mentioned above or other 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 and/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 collectability 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 $ 1.9 million and $ 1.6 million were necessary as of March 31, 2024 and December 31, 2023, respectively.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to the concentration of credit risk 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 financial institution located in Korea where amounts deposited may exceed Federal Deposit Insurance Corporation or Korea Deposit Insurance Corporation limits.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company’s accounts receivable balances are primarily derived from revenues earned from customers located in the United States, China, Korea, Japan and Taiwan.

The Company performs ongoing credit evaluations of its customers’ and distributors’ financial condition and generally does not require collateral from its customers.

The Company’s net revenue and accounts receivable are concentrated among a few significant customers, which could expose the Company to financial risk in the event of adverse developments with these customers.

Four customers accounted for approximately 28 percent, 19 percent, 18 percent and 13 percent of the Company’s gross accounts receivable as of March 31, 2024.

Four customers accounted for approximately 27 percent, 19 percent, 14 percent and 10 percent of the Company’s gross accounts receivable as of December 31, 2023.

Two customers accounted for approximately 61 percent and 24 percent of the Company’s total net revenues for the three months ended March 31, 2024.

Four customers accounted for approximately 28 percent, 28 percent, 25 percent, and 10 percent of the Company’s total net revenues for the three months ended March 31, 2023.

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 to diversify its customer base and explore 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 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, net in the condensed consolidated statements of operations.

The Company recognized $ 1.1 million and $ 0.7 million foreign currency exchange gains for the three months ended March 31, 2024 and 2023, respectively.

Convertible Promissory Notes

The Company has elected the fair value option to account for its outstanding convertible promissory notes.

Under the fair value option, the convertible promissory notes must be recorded at their initial fair value on the date of issuance, any modification, and at the end of each reporting period end date thereafter.

Changes in the estimated fair value of the convertible promissory notes are recognized as non-cash gains or losses in other income, net in the condensed consolidated statements of operations.

Contracts in Equity

The Company classifies contracts in equity, 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, such liability classified instruments are remeasured and changes in fair value during the reporting period are recognized within the condensed consolidated statements of operations until the earlier of the exercise, settlement, or expiration.

The Company classifies contracts in equity, including the Legacy GCT Earnouts and Sponsor Earnouts (discussed in Note 3), that meet the indexation and equity classification guidance as a component of stockholders’ deficit and are not subject to fair value remeasurements.

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 issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies.

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 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.

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 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 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, which provides an exception to fair value measurement for contract assets and contract liabilities related to revenue contracts acquired in a business combination.

The ASU requires an entity (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 condensed consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

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.

The ASU 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.

The ASU also requires the investor to disclose the fair value of equity securities subject to contractual sale restrictions, the nature and remaining duration of the restriction(s), and the circumstances that could cause a lapse in the restriction(s).

The ASU is effective for annual and interim periods beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the effect the adoption of ASU 2022-03 will have on its condensed consolidated financial statements.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280) :

Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses.

The ASU 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 the adoption of ASU 2023-07 will have on its condensed consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740) :

Improvements to Income Tax Disclosures, 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.

The ASU 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 the adoption of ASU 2023-09 will have on its condensed consolidated financial statements.

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 .

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

● 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).

The number of shares of common stock issued and outstanding immediately following consummation of the Business Combination was (in thousands):

Common stock of Concord III outstanding prior to the Business Combination

redemption of Concord III’s common stock

Sponsor earnout common stock outstanding prior to the Business Combination

Common stock of Concord III issued and outstanding

Common stock issued in PIPE Financing

Legacy GCT common stock

Total common stock issued and outstanding

The Business Combination was accounted for as a reverse recapitalization under U.S.

GAAP because Legacy GCT was determined to be the accounting acquirer under the FASB’s Accounting Standards Codification (“ASC”) Topic 805, Business Combinations .

Under this method of accounting, Concord III was treated as the “acquired” company for financial reporting purposes.

Accordingly, for accounting purposes, 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 stock for the net assets of Concord III, accompanied by a recapitalization.

The net assets of Concord III were stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination are those of Legacy GCT.

Legacy GCT was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

● Legacy GCT stockholders comprise a relative majority of the voting power of GCT;

● Legacy GCT stockholders have 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 will comprise the only ongoing operations of GCT;

● Legacy GCT’s senior management comprises the senior management of GCT;

● GCT substantially assuming the Legacy GCT name;

● Legacy GCT’s headquarters will become GCT’s headquarters;

● Concord III did not meet the definition of a business.

PIPE Financing

Concurrent with the execution of the Business Combination Agreement, certain investors (the “PIPE Investors”) entered into subscription agreements (the “PIPE Subscription Agreements”) pursuant to which the PIPE Investors had committed to purchase in a private placement an aggregate of 4,529,967 shares of 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”).

The purchase of the PIPE Shares was conditioned upon the consummation of the Business Combination.

The PIPE Financing was consummated immediately prior to the Closing.

The Company received net proceeds of $ 17.1 million from the PIPE Financing.

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”).

Collectively these warrant shares are referred to as “private and public warrants” and included settlement provisions that precluded equity classification.

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.

The Company has historically accounted for the private and public warrants as liability-classified financial instruments.

This conclusion is based on the applicable provisions of the private and public warrants, including their settlement terms upon a change in control or similar transactions that precluded equity classification.

After the Closing, the private and public warrants remained liability-classified as the applicable provisions did not change and apply to future operations of the Company.

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 an aggregate of 20,000,000 shares of Company common stock (“Earnout Shares”), if at any time during the period starting 60 trading days following the Closing and expiring on the 5 th anniversary of the Closing Date:

(i) with respect to 6,666,667 of the Earnout Shares, the volume weighted average price (“VWAP”) of the Company’s common stock equals or exceeds $ 12.50 per share for any 20 trading days within a period of 30 consecutive trading days, (ii) with respect to 6,666,666 of the Earnout Shares, the VWAP of the Company’s common stock equals or exceeds $ 15.00 per share for any 20 trading days within a period of 30 consecutive trading days, and (iii) with respect to 6,666,667 of the Earnout Shares, the VWAP of the Company’s common stock equals or exceeds $ 17.50 per share for any 20 trading days within a period of 30 consecutive trading days.

In the event of a future 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 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 Earnout Shares subject to the applicable triggering event that have not been previously issued will be forfeited.

The Legacy GCT Earnout shares have been recognized at fair value of approximately $ 108.8 million upon the Closing and classified within stockholders’ deficit as the Legacy GCT Earnout shares are indexed to the common stock and are otherwise not precluded from equity classification based on their settlement provisions.

The fair value of the Legacy GCT Earnout Shares was determined based on a valuation using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free rate, and volatility.

Due to the fact that the Business Combination is accounted for as a reverse recapitalization, the Legacy GCT Earnout shares are treated as a deemed dividend.

Due to the fact that the Company does not have any retained earnings, the Company recorded the corresponding entries to additional paid-in capital and therefore have a net nil impact on stockholders’ deficit during the period ended March 31, 2024.

In future reporting periods, the Company will monitor that the Legacy GCT Earnout shares meet the equity classification criteria until expiration or settlement.

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 an aggregate of 1,920,375 shares of the Company common stock multiplied by the Sponsor Earnout Ratio (as defined in the Sponsor Support Agreement) (“Sponsor Earnout Shares”), if at any time during the period starting 6 months following the Closing and expiring on the 5 th anniversary of the Closing Date:

(i) with respect to one -third of the Sponsor Earnout Shares, the VWAP of the Company’s common stock equals or exceeds $ 12.50 per share for any 20 trading days within a period of 30 consecutive trading days, (ii) with respect to one -third of the Sponsor Earnout Shares, the VWAP of the Company’s common stock equals or exceeds $ 15.00 per share for any 20 trading days within a period of 30 consecutive trading days, and (iii) with respect to one -third of the Sponsor Earnout Shares, the VWAP of the Company’s common stock equals or exceeds $ 17.50 per share for any 20 trading days within a period of 30 consecutive trading days.

Notwithstanding the foregoing, in no event shall the number of Sponsor Earnout Shares be less than 570,796 .

The Sponsor Earnout Shares have been recognized at fair value of approximately $ 10.4 million upon the Closing and classified within stockholders’ deficit as the Sponsor Earnout Shares are indexed to the common stock and are otherwise not precluded from equity

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

classification based on their settlement provisions.

The fair value of the Sponsor Earnout Shares was determined based on a valuation using a Monte Carlo simulation with key inputs and assumptions such as stock price, term, dividend yield, risk-free rate, and volatility.

Since the Business Combination is accounted for as a reverse recapitalization, the issuance of the Sponsor Earnout Shares are treated as a deemed dividend.

Since the Company does not have retained earnings, the issuance of the Sponsor Earnout Shares at the Closing is recorded within additional paid-in capital and has a net nil impact on stockholders’ deficit during the period ended March 31, 2024.

In future reporting periods, the Company will monitor that the Sponsor Earnout shares meet the equity classification criteria until expiration or settlement.

Disaggregation of Revenue

Disaggregation of revenues from contracts with customers is as follows (in thousands):

Three Months Ended March 31, 2024

Product Revenues

Service Revenues

Timing of revenue recognition

At a point in time

Three Months Ended March 31, 2023

Product Revenues

Service Revenues

Timing of revenue recognition

At a point in time

Net revenues categorized by customer location are as follows (in thousands):

Three Months Ended March 31,

United States

Contract Assets and Liabilities

Details of contract assets and liabilities is as follows (in thousands):

March 31, 2024

December 31, 2023

Marketable securities and cash held in Trust Account

September 30, 2023

Contract assets

Assets recognized for costs incurred to fulfill a contract (*)

Contract liabilities

The balances are included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Net revenues recognized in relation to contract liabilities are as follows as of the periods indicated (in thousands):

March 31, 2024

March 31, 2023

Net revenues recognized that were included in the contract liabilities balance at the beginning of the period

Fair Value of Measurements

Fair value hierarchy classifications of the financial instruments that are measured at fair value on a recurring basis are as follows (in thousands):

March 31, 2024

Convertible promissory notes

Warrant liabilities

December 31, 2023

Warrant Liability – Public Warrants

Warrant Liability – Private Placement Warrants

Sponsor Loans

As of September 30, 2023 and December 31, 2022, investments held in Trust Account consisted of mutual funds and generally have a readily determinable fair value.

As of September 30, 2023 and December 31, 2022, the Company’s warrant liability for the Public Warrants is based on unadjusted quoted prices and were classified as Level 2 as there was insufficient activity for the Company’s Public Warrants to be classified as Level 1.

The fair value of the Company’s Private Placement Warrants for all periods presented is based on a Black-Scholes-Merton model utilizing management judgment and pricing inputs from observable and unobservable markets with less volume and transaction frequency than active markets.

The Company valued the Sponsor Loans using the bond plus call approach, where the fair value of the Notes was calculated as the sum of (i) the fair value of the contractual cash flows of the Sponsor Loans absent the Conversion Option and (ii) the fair value of the Conversion Option which is determined using a risk-neutral framework based on the daily binomial lattice analysis.

The inputs used to measure fair value of the Private Placement Warrants and the Sponsor Loans are classified within Level 3 of the fair value hierarchy.

Significant deviations from these estimates and inputs could result in a material change in fair value.

The following table sets forth the fair value and unpaid principal balance as of September 30, 2023 and 2022 for the Sponsor Loans.

Fair Value Option

Unpaid Principal Balance

September 30, 2023

Convertible promissory notes

Valuation techniques and the 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

March 31, 2024

December 31, 2023

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

The key inputs into the valuation model for the Sponsor Loans were as follows:

Convertible promissory notes, current

Discounted Cash Flow Model (“DCF”)

Discount rate, risk-free rate, credit spread, contractual cash flows

PWERM (“Probability-Weighted Expected Return Method”)

Scenario of initial public offering (“IPO”) and merger & acquisition (“M&A”)

Convertible promissory notes, net of current

Binomial Lattice Model (“BLM”)

Stock price, volatility, remaining term, risk-free rate, credit spread

Scenario of initial public offering (“IPO”) and merger & acquisition (“M&A”)

Warrant liabilities – private and public warrants

Black Scholes Merton Model (“BSM”) or BLM

Exercise price, term to expiration, volatility, risk-free rate

Warrant liabilities - other

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

As of March 31, 2024, the key inputs for the convertible promissory notes, current using the DCF were as follows:

remaining term of 0.25 years and a discount rate of 10.2 %.

As of March 31, 2024, the key inputs for the convertible promissory notes, net of current using the BLM were as follows:

stock price of $ 6.58 , volatility of 32.2 %, remaining term of 1.9 years, risk-free rate of 4.6 %, and credit spread of 5.0 %.

As of March 31, 2024, the key inputs for the private placement warrants using the BSM were as follows:

exercise price of $ 11.50 per share, term to expiration of 5 years, volatility range of 19.4 % and a risk-free rate of 4.2 %.

As of March 31, 2024, the key inputs for the public warrants using the BLM were as follows:

exercise price of $ 11.50 per share and term to expiration of 5.0 years.

As of March 31, 2024, the key inputs for the warrant liabilities – other using the BSM were as follows:

an exercise price of $ 5.00 per share, or $ 10.00 per share or $ 18.75 per share, term to expiration ranging from 0.4 years to 2.6 years, volatility ranging from 29.5 % to 32.7 %, and a risk-free rate ranging from 4.4 % to 5.4 %.

As of December 31, 2023, the PWERM was used as Legacy GCT was a private company.

After the Closing, and as of March 31, 2024, the valuation techniques used reflect that the Business Combination was consummated.

The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities (in thousands):

Three Months Ended March 31,

Convertible promissory notes fair value - beginning of period

Change in fair value of convertible promissory notes

Conversion of convertible promissory notes

Borrowing of convertible promissory notes

Convertible promissory notes fair value - end of period

Three Months Ended March 31,

Warrant Liabilities Fair value - beginning of period

Private and public warrants assumed at Closing

Change in fair value of warrant liabilities

Warrant Liabilities Fair value - end of period

The gains and losses from fair value re-measurement of Level 3 financial liabilities are recorded as other income, net in the condensed consolidated statements of operations.

Balance Sheet Components

Inventories consists of the following (in thousands):

Raw materials

Work-in-process

Finished goods

Total inventory

There were no write-downs of inventory into cost of net revenues for the three months ended March 31, 2024 and 2023.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Prepaid expenses and other assets

Prepaid expenses and other assets consist of the following (in thousands):

Prepaid expenses

Prepaid inventory

Lease deposit

Other receivables and current assets

Prepaid expenses and other current assets

Accrued and other current liabilities

Accrued and other current liabilities consist of the following (in thousands):

Payroll and related expenses

Accrued payables

Other taxes payable

Current portion of interest payable

Professional fees

Royalty and license fee

Product warranty

Accrued and other current liabilities

The Company’s outstanding debt was as follows (in thousands):

Convertible promissory notes:

Historical convertible promissory notes

2023 & 2024 convertible promissory notes

KEB Hana Bank

IBK Industrial Bank

Note payable (one individual investor)

M-Venture Investment, Inc.

Anapass, Inc, related party

i Best Investment Co., Ltd

Kyeongho Lee, related party

current portion

Debt, net of current portion

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The Company elected the fair value option for the 2023 & 2024 convertible promissory notes and the historical convertible promissory notes (see Note 5).

The Company’s other borrowings approximate their fair value because interest rates are at prevailing market rates and/or the short-term nature of the remaining obligations.

See Note 14 for additional information on related parties.

Expected future minimum principal payments under the Company’s total debt is as follows as of March 31, 2024 (in thousands):

2024, remainder

Convertible Promissory Notes

Historical Convertible Promissory Notes

Between 2017 and 2022, the Company issued convertible promissory notes to various investors with maturity dates ranging from October 2020 to April 2025.

The annual interest rates varied between 4.0 % and 7.0 %.

In November 2023, the Company entered into an amendment with certain convertible promissory noteholders to modify the conversion terms such that these notes were automatically convertible upon a special purpose acquisition company (“SPAC”) transaction.

In March 2024, upon the Closing of the Business Combination, an aggregate principal and interest amount of $ 32.1 million converted into 4,258,223 shares of common stock at a conversion price of $ 10.00 .

As of March 31, 2024, the remaining principal and interest amount of $ 7.9 million was outstanding and related to two noteholders where conversion is at each noteholder’s discretion and at a conversion price of $ 3.50 per share.

In April 2024, the Company repaid one of the convertible promissory notes (see Note 17).

2023 & 2024 Convertible Promissory Notes

In November 2023, February 2024 and March 2024, the Company issued convertible promissory notes to certain investors (the “CVT Investors”), pursuant to which the CVT Investors agreed to lend to the Company an aggregate principal amount of $ 13.3 million.

These notes had maturity dates ranging from November 2026 to March 2027, bore an interest rate of 5.0 % and were automatically convertible upon IPO or SPAC transaction.

In March 2024, upon the Closing of the Business Combination, an aggregate principal and interest amount of $ 13.4 million converted into 2,004,535 shares of common stock at a conversion price of $ 6.67 .

As of March 31, 2024, none of the notes issued to CVT Investors remain outstanding.

In February 2024, the Company issued a convertible promissory note to a strategic investor for a principal amount of $ 5.0 million, which matures in February 2026 and bears an interest rate of 5.0 % per annum.

On or after the earlier of (i) six months from the issuance date of the convertible promissory note and (ii) the Closing of the Business Combination, the noteholder may demand that the Company convert all principal and interest due under the convertible promissory note into shares of Company’s common stock, at a conversion price of $ 10.00 per share.

This note includes customary representations, warranties, and events of default, as well as a covenant relating to the performance of obligations by the Company related to the Company’s 5G activity.

As of March 31, 2024, the remaining principal and interest amount of $ 5.0 million was outstanding.

Borrowings Pursuant to Term Loan and Security Agreements

KEB Hana Bank

In July 2016, the Company entered into an unsecured term loan agreement with KEB Hana Bank pursuant to which it borrowed KRW 9.0 billion ($ 6.7 million), bearing a variable interest rate ( 2.6 % initial annual interest rate and 5.2 % as of March 31, 2024), paid monthly, and maturing in July 2017.

The terms of such unsecured term loan agreement have been extended annually for additional one-year terms since 2017, and the maturity date is July 2024.

Anapass, Inc., a related party, provided certificates of deposit as collateral to KEB Hana

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Bank to secure the Company’s obligations under this loan (see Note 8).

As of March 31, 2024, the remaining principal and interest amount of $ 6.7 million was outstanding.

IBK Industrial Bank

In January 2017, the Company entered into a term loan agreement with IBK Industrial Bank pursuant to which the Company borrowed KRW 9.2 billion ($ 6.8 million).

The term loan has a maturity date in November 2024 and bears an annual interest rate of 4.9 %.

As of March 31, 2024, the remaining principal and interest amount of $ 6.8 million was outstanding.

Note Payable (One Individual Investor)

In June 2021, the Company entered into a note payable agreement with an individual investor pursuant to which the Company borrowed $ 1.0 million.

The note has a maturity date in June 2024 and bears an annual interest rate of 4.0 %.

In April 2022, the Company entered into an amendment with this one individual investor to remove the conversion right from the note payable.

As of March 31, 2024, the remaining principal and interest amount of $ 1.1 million was outstanding.

M-Venture Investment, Inc.

In October 2021, the Company entered into a term loan and security agreement with M-Venture Investment, Inc.

pursuant to which the Company borrowed KRW 5.0 billion ($ 3.7 million) and repaid KRW 0.6 billion ($ 0.4 million) and KRW 0.4 billion ($ 0.3 million) in 2021 and 2022, respectively, such that KRW 4.0 billion ($ 3.0 million) remained outstanding.

The term loan has a maturity date in October 2024 and bears an annual interest rate of 6.5 %.

As of March 31, 2024, the remaining principal and interest amount of $ 3.1 million was outstanding.

In April 2022, the Company entered into a term loan and security agreement with M-Venture Investment, Inc.

pursuant to which the Company borrowed amounts in two draws of KRW 1.0 billion ($ 0.7 million) and KRW 5.0 billon ($ 3.7 million), respectively.

The term loan has a maturity date in April 2024 and each respective draw bears an annual interest rate of 6.5 % and 8.7 %.

As of March 31, 2024, the remaining principal and interest amount of $ 4.8 million was outstanding.

In April 2024, the Company executed amendments with M-Venture Investment, Inc.

(see Note 17).

Anapass, Inc., Related Party

In July 2016, the Company entered into a loan agreement with Anapass, Inc.

pursuant to which the Company borrowed KRW 6.0 billion ($ 4.5 million) in a term loan.

Interest only payments are due monthly at 5.5 % per annum and the principal amount of the term loan is due on the maturity date of July 2024.

The loan is collateralized by the Company’s assets as described under the Assets Pledged as Collateral (see Note 8).

As of March 31, 2024, the remaining principal and interest amount of $ 4.5 million was outstanding.

In May and September 2022, the Company entered into two term loan agreements with Anapass, Inc.

pursuant to which the Company borrowed KRW 3.0 billion ($ 2.2 million) and KRW 4.0 billion ($ 3.0 million) in term loans.

The term loans have respective maturity dates in May 2024 and September 2024 and both bear an annual interest rate of 5.5 %.

As of March 31, 2024, the remaining principal and interest amount of $ 5.2 million was outstanding.

i Best Investment Co., Ltd

From 2022 and 2023, the Company entered into multiple term loans and security agreements with i Best Investment Co., Ltd pursuant to which it borrowed principal amounts in six draws with an aggregate principal balance of KRW 14.0 billion ($ 10.3 million).

All of the term loans have a maturity date in June 2024 and bear an annual interest rate of 6.5 %.

In December 2023, the Company made a $ 0.8 million repayment of the outstanding principal and interest on its second draw.

In March 2024, the Company made a $ 2.3 million repayment of the outstanding principal and interest amount of its fourth draw.

As of March 31, 2024, the remaining principal and interest amounts outstanding were as follows:

$ 3.3 million outstanding on its first draw, $ 1.6 million outstanding on its third draw, $ 2.3 million outstanding on its fifth draw and $ 0.8 million on its sixth draw.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Kyeongho Lee, Related Party

From 2017 and 2021, the Company entered into multiple promissory note and term loan agreements with Kyeongho Lee pursuant to which the Company borrowed (a) KRW 500.0 million ($ 0.4 million), and KRW 500.0 million ($ 0.4 million) in promissory notes, and (b) KRW 1.0 billion ($ 0.7 million) and KRW 110.0 million ($ 0.1 million) in term loans.

The promissory notes have a maturity date in November 2024 and bear an annual interest rate varying from 7.5 % and 9.0 %.

During the three months ended March 31, 2024, the Company repaid in full one of the term loans.

The term loan has a maturity date in May 2024 and bears an annual interest rate of 0.0 %.

As of March 31, 2024, the remaining principal and interest amount of $ 0.7 million and $ 82,000 was outstanding as it related to the promissory notes and a term loan, respectively.

Commitments and Contingencies

The Company is subject to various claims arising in the ordinary course of business.

Although no assurance can be given, the Company believes that it is not a party to any litigation of which the outcome, if determined adversely, would individually, or in the aggregate, be reasonably expected to have a material adverse effect on the business, consolidated operating results, cash flows or financial position of the Company as of March 31, 2024.

Third parties have from time to time claimed, and others may claim in the future, that the Company has infringed their past, current or future intellectual property rights.

These claims, whether meritorious or not, could be time consuming, result in costly litigation, require expensive changes in the Company’s methods of doing business or could require the Company to enter into costly royalty or licensing agreements, if available.

As a result, these claims could harm the Company’s business, consolidated operating results, cash flows, and financial position.

Purchase Commitment

The Company has certain commitments for outstanding purchase orders related to the manufacture of certain wafers utilized by the Company and other services that, once the wafers are placed into production, are noncancelable.

Otherwise, these production agreements are cancellable at any time with the Company required to pay all costs incurred through the cancellation date.

However, the Company has rarely cancelled these agreements once production has started.

As of March 31, 2024, the Company had no outstanding noncancelable purchase commitments for these production agreements.

In July 2020, the Company entered into a research and development agreement with Samsung Electronics Co., Ltd (“Samsung”).

According to the agreement, the Company would design 5G chip products and Samsung would provide development and intellectual property support, mass production set up support including mask sets for manufacturing and engineering sample chip supply to the Company for a specific product.

The total fee amount for the research and development (“R&D”) services pursuant to the agreement was $ 21.1 million.

The Company bore the risk of R&D failure and was obligated to pay the $ 21.1 million total fee based on milestones defined in the agreement, of which $ 11.7 million was due based on development milestones and $ 9.4 million of additional NRE (“non-recurring engineering”) was to be paid within a maximum of 4 years after the planned product first shipment date.

The Company recognized R&D expenses based on an estimate of the percentage completion of services provided by Samsung during the respective financial reporting period.

In the first quarter 2024, Samsung agreed to unconditionally release the Company from payment for work Samsung had completed to date because it had not met certain of the development milestones and due to a change in Samsung’s business strategy.

As a result, the Company recognized a gain of $ 14.6 million upon such unconditional release of its liability to Samsung.

During the period ended March 31, 2024, the parties mutually agreed that the agreement had expired and there were no remaining obligations of either party under the agreement.

In February 2024, the Company and Alpha Holdings Co., Ltd.

(“Alpha”) entered into a foundry product development agreement related to 5G chip development for a total fee of $ 7.6 million.

The Company bears the risk of R&D failure and is obligated to pay the fee based on milestones defined in the agreement.

The Company recognizes R&D expenses based on an estimate of the percentage completion of services provided by Alpha during the respective financial reporting period.

For the three months ended March 31, 2024, the Company recorded $ 3.5 million in R&D expenses related to services provided by Alpha.

The aggregate unpaid amount related to this agreement is $ 5.0 million as of March 31, 2024.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Assets Pledged as Collateral

The Company has provided collateral to Anapass, Inc., a related party (see Note 14), for borrowings from KEB Hana Bank, IBK Industrial Bank and Anapass, Inc.

in the amount of $ 6.7 million, $ 6.8 million and $ 9.7 million, respectively, as of March 31, 2024, and $ 7.0 million, $ 7.1 million and $ 10.1 million, respectively, as of December 31, 2023 (see Note 7).

The following table includes a summary of the collateral provided to Anapass, Inc.

(in thousands):

Cash and cash equivalents

Accounts receivable

Anapass, Inc.

Property and equipment

Intangible assets and others

In connection with the Closing of the Business Combination, the Company increased its total number of authorized shares to 440,000,000 shares, consisting of 400,000,000 shares of common stock and 40,000,000 shares of preferred stock.

The Company has reserved shares of common stock for issuance as follows (in thousands):

Shares available for future grant from 2024 plan

Convertible promissory notes

Options issued and outstanding

Shares available for future grant from 2024 ESPP

RSUs outstanding

Shares available for future grant from 2011 plan

The following table represents a summary of warrants to purchase shares of the Company’s common stock that are outstanding (in thousands, except for exercise price):

March 31, 2024

Exercise Price

$ 10.00 - $ 18.75

September 2021

February 2023 - June 2023

$ 10.00 - $ 18.75

Private and public warrants

March 26, 2029

(1) Within 3 years from the date of issuance.

See Note 3 with respect to further details on the private and public warrants and Note 5 with respect to valuation techniques and assumptions because the warrants are all liability-classified and subject to fair value measurement each reporting period.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Stock-Based Compensation

2011 Incentive Compensation Plan

Legacy GCT’s 2011 Incentive Compensation Plan (the “2011 Plan”) permitted the grant of options, stock awards, and RSUs.

In connection with the Closing of the Business Combination, the 2011 Plan was terminated, the remaining unallocated shares reserved under the 2011 Plan were cancelled and no new awards will be granted under the 2011 Plan.

Each award of Legacy GCT stock options and RSUs were converted into equivalent Company stock options and RSUs with the same terms and conditions under the plan described below.

2024 Incentive Compensation Plan

In connection with the Closing of the Business Combination, the Company adopted the 2024 Incentive Compensation Plan (the “2024 Plan”) under which 3,983,334 shares of common stock were initially reserved for issuance, subject to approval by the Company’s boards of directors.

The 2024 Plan permits the grant of stock options, stock appreciation rights, stock awards, restricted stock units, dividend equivalent right, cash awards and other awards to employees, non-employee directors, non-employee members of the board of directors, or consultants or independent advisors.

Stock options outstanding under the 2024 Plan were as follows (in thousands, except per share amounts and years):

Contractual Life

Exercise Price

Intrinsic Value

Balance as of December 31, 2023

Reverse recapitalization

Balance as of December 31, 2023 (1)

Balance as of March 31, 2024

Vested as of March 31, 2024

Exercisable as of March 31, 2024

There were no options granted during the three months ended March 31, 2024 and 2023.

As of March 31, 2024, unrecognized compensation cost related to stock options was nominal.

Founder Awards to Board of Directors

In 2021, an aggregate of 90,000 founder shares of common stock were transferred to three members of Concord III’s board of directors.

The shares contained both a performance condition based upon a liquidity event and a service vesting condition.

As the liquidity and services conditions were met upon the Closing of the Business Combination, the Company recognized $ 0.9 million of stock-based compensation during the three months ended March 31, 2024.

Restricted Stock Units

In December 2023, various employees and directors of Legacy GCT were granted RSUs that contain both a performance condition based upon a liquidity event and a service vesting condition such that the RSUs vest in four equal annual installments from the grant

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Any unvested RSUs are forfeited upon separation from the Company.

The liquidity condition was met upon the Closing of the Business Combination and the Company recognized $ 0.3 million of stock-based compensation.

RSUs outstanding under the 2024 Plan were as follows (in thousands, except per share amounts):

Number of RSUs

Average Grant

Date Fair Value

Balance as of December 31, 2023

Reverse recapitalization

Balances as of December 31, 2023 (1)

Balance as of March 31, 2024

As of March 31, 2024, there was $ 2.1 million of unrecognized compensation cost related to RSUs, which is expected to be recognized on a straight-line basis over a weighted average period of 3.7 years.

For the three months ended March 31, 2024 and 2023, the Company recorded income tax expense of $ 59,000 and $ 50,000 , respectively.

The effective tax rate is 7.2 % and 3.7 % for the three months ended March 31, 2024 and 2023, respectively.

For financial reporting purposes, the Company’s effective tax rate used for the interim periods is based on the estimated full-year income tax rate.

For the three months ended March 31, 2024, the Company’s effective tax rate differs from the statutory rate primarily due to the valuation allowance recorded against the net deferred tax asset balance.

As of March 31, 2024 the Company had unrecognized tax benefits of $ 3.1 million of which $ 1.7 million would currently affect the Company’s effective tax rate if recognized due to the Company’s deferred tax assets being fully offset by a valuation allowance.

The Company does not anticipate that the amount of unrecognized tax benefits relating to tax positions existing as of March 31, 2024 will significantly increase or decrease within the next twelve months.

There was no interest expense or penalties related to unrecognized tax benefits recorded as of March 31, 2024.

A number of years may elapse before an uncertain tax position is audited and finally resolved.

While it is often difficult to predict the final outcome or the timing of resolution of any particular uncertain tax position, the Company believes that its reserves for income taxes reflect the most likely outcome.

The Company adjusts these reserves, as well as the related interest, in light of changing facts and circumstances.

Settlement of any particular position could require the use of cash.

Currently the Company is not under examination by any taxing authority.

Employee Benefit Plans

Under Korean law, the Company is required to make severance payments to Korean employees leaving its employment.

The Company’s severance pay liability to its Korean employees, which is a function of the salary of each employee’s years of employment and severance factor, is reflected in the accompanying condensed consolidated balance sheets as the net defined benefit liabilities on an accrual basis.

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The net liability for severance payments as of (in thousands):

March 31, 2024

December 31, 2023

Common stock price

Risk-free interest rate (Bond)

Risk-free forward interest rate (Conversion Option)

Expected term in years

Expected volatility

Credit spread

The key inputs into the model for the Private Placement Warrants were as follows:

September 30, 2023

Liability for severance payments, beginning

Liability for severance payments, ending

Related Party Transactions

A summary of balances and transactions with the related parties who are stockholders of the Company were as follows as of (in thousands):

March 31, 2024

December 31, 2023

Common stock price

Risk-free interest rate

Expected term in years

Expected volatility

Exercise price

Warrant fair value

To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

Because of the inherent uncertainty of valuation, those estimated values may be materially higher or lower than the values that would have been used had a ready market for the investments existed.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for investments categorized in Level 3.

The following table provides a reconciliation of changes in fair value of the beginning and ending balances for our financial instruments classified as Level 3:

Private Placement

Sponsor Loans

Fair value as of January 1, 2023

Change in valuation inputs or other assumptions

Fair value as of March 31, 2023

Change in valuation inputs or other assumptions

Fair value as of June 30, 2023

Change in valuation inputs or other assumptions

Fair value as of September 30, 2023

Note 7 — Subsequent Events

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were issued.

Based upon this review, other than stated below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.

On November 2, 2023, the Company entered into the Business Combination Agreement with GCT and Merger Sub.

Pursuant to the Business Combination Agreement, the parties will consummate a business combination transaction pursuant to which Merger Sub will merge with and into GCT, with GCT surviving the merger as a wholly-owned subsidiary of the Company.

See “Note 1 – Organization, Business Operations and Liquidity – Proposed Business Combination.”

CONCORD ACQUISITION CORP III

NOTES TO CONDENSED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

In November 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO in connection with the special meeting of stockholders called by the Company and held on November 7, 2023.

In exchange for the foregoing commitments not to redeem such shares, the Company has agreed to allocate to such investors an aggregate of 782,001 Promote Shares and the Sponsor has agreed to surrender and forfeit to the Company for no consideration a number of shares of Class B common stock equal to the number of Promote Shares upon closing of an initial business combination.

Other current liabilities

For each of the three months ended March 31, 2024 and 2023, the Company recorded $ 0.1 million of interest expense with Anapass, Inc.

in the condensed consolidated statements of operations.

During the three months ended March 31, 2024 and 2023, the Company recorded $ 22,000 and $ 26,000 , respectively, of interest expense with Kyeongho Lee in the condensed consolidated statements of operations.

Segments and Information

The Company operates in one segment.

Revenue information by geographic region is presented in Note 4 to these condensed consolidated financial statements.

Long-lived assets by geographic region were as follows as of (in thousands):

March 31, 2024

December 31, 2023

United States

Total long-lived assets

Net Income (Loss) Per Share

The following table summarizes the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):

Three Months Ended March 31,

Net income (loss), basic and diluted

Weighted-average common shares outstanding, basic

effect of dilutive securities

Weighted-average common shares outstanding, diluted

Net income (loss) per share, basic and diluted

GCT SEMICONDUCTOR HOLDING, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

The following outstanding potentially dilutive common stock equivalents were excluded from the computation of diluted net income (loss) per share for the periods indicated because including them would have been antidilutive (in thousands):

Convertible promissory notes

Subsequent Events

Purchase Agreement and Registration Rights Agreement

In April 2024, the Company entered into a common stock purchase agreement (the “Purchase Agreement”) and a related registration rights agreement (the “Registration Rights Agreement”) with B.

Riley Principal Capital II, LLC (“B.

Riley Principal Capital II”).

Upon the terms and subject to the satisfaction of the conditions set forth in the Purchase Agreement, the Company has the right, in its sole discretion, to sell to B.

Riley Principal Capital II, from time to time, up to $ 50.0 million in aggregate gross purchase price of shares of the Company’s common stock, subject to certain limitations contained in the Purchase Agreement, during the term of 24 months .

Pursuant to the Registration Rights Agreement, the Company is required to file a registration statement on Form S-1 to register the resale of shares of common stock that are sold to B.

Riley Principal Capital II under the Purchase Agreement.

Sales of common stock by the Company to B.

Riley Principal Capital II pursuant to the Purchase Agreement, and the timing of any such sales, are solely at the option of the Company, and the Company is under no obligation to sell any securities to B.

Riley Principal Capital II under the Purchase Agreement.

M-Venture Investment, Inc.

In April 2024, the Company executed an amendment with M-Venture Investment, Inc.

for the KRW 4.0 billion ($ 3.0 million) term loan outstanding, pursuant to which the Company repaid KRW 2.0 billion ($ 1.5 million) in April 2024 and extended the maturity date from October 2024 to May 2024 (see Note 7).

In April 2024, the Company executed an amendment with M-Venture Investment, Inc.

for the KRW 6.0 billion ($ 4.4 million) term loan outstanding, pursuant to which the maturity date for both draws were amended.

The maturity date for the principal amount of KRW 1.0 billion ($ 0.7 million) was extended from April 2024 to June 2024.

The maturity date for the principal amount of KRW 5.0 billion ($ 3.7 million) was extended from April 2024 to July 2024 (see Note 7).

Historical Convertible Promissory Notes

In April 2024, the Company repaid in full a historical convertible promissory note that was issued in 2021 with a principal amount of $ 0.6 million (see Note 7).

Share Reserve

In May 2024, the board of directors of the Company approved 3,983,334 shares as the maximum number of shares of Common stock that may be issued pursuant to 2024 Plan, and 600,000 shares as reserved share amount of 2024 Employee Stock Purchase Plan.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements