What changed in this filing

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Item 1. Financial Statements

2025-11-13 compared with 2025-08-13 · 367 added, 227 removed, 1508 unchanged (28% of the section changed)

2 unchanged sentences

(Unaudited, in thousands, except per share data)

September 30,

Current assets:

2 unchanged sentences

Restricted cash

Accounts receivable, net of allowances for credit losses of $ 147 and $ 147 as of June 30, 2025 and December 31, 2024

Accounts receivable, net of allowances for credit losses of $ 141 and $ 147 as of September 30, 2025 and December 31, 2024

33,837 25,640

28 unchanged sentences

2,000 shares authorized;

883 shares issued and outstanding as of June 30, 2025 and December 31, 2024 (Liquidation preference of $ 8,140 and $ 8,052 as of June 30, 2025 and December 31, 2024)

883 shares issued and outstanding as of September 30, 2025 and December 31, 2024 (Liquidation preference of $ 8,184 and $ 8,052 as of September 30, 2025 and December 31, 2024)

Common stock, $ 0.001 par value;

70,000 shares authorized;

46,078 and 45,358 shares issued and outstanding as of June 30, 2025 and December 31, 2024

46,218 and 45,358 shares issued and outstanding as of September 30, 2025 and December 31, 2024

Additional paid-in capital

17 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

$ 27,955 $ 23,645 $ 65,285 $ 74,256

Cost of revenue

21,731 17,963 58,869 54,828

6,224 5,682 6,416 19,428

Operating expenses:

Selling, general and administrative

6,334 5,650 17,903 17,656

Research and development

1,013 3,438 6,656 10,410

Total operating expenses

7,347 9,088 24,559 28,066

Loss from operations

( 1,123 ) ( 3,406 ) ( 18,143 ) ( 8,638 )

Interest expense, net

Gain (loss) from equity method and fair value investments

Other income, net

( 395 ) ( 391 ) ( 866 ) ( 1,022 )

Gain from equity method and fair value investments

515 1,007 592 2,495

Other income (expense), net

( 166 ) 529 211 2,052

Loss before provision for income taxes

( 1,169 ) ( 2,261 ) ( 18,206 ) ( 5,113 )

Provision for income taxes

504 626 1,157 1,021

( 1,673 ) ( 2,887 ) ( 19,363 ) ( 6,134 )

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests

( 233 ) ( 50 ) 1,651 ( 402 )

Net loss attributable to AXT, Inc.

$ ( 1,906 ) $ ( 2,937 ) $ ( 17,712 ) $ ( 6,536 )

Net loss attributable to AXT, Inc.

per common share:

$ ( 0.04 ) $ ( 0.07 ) $ ( 0.41 ) $ ( 0.15 )

Weighted-average number of common shares outstanding:

43,842 43,157 43,701 43,079

See accompanying notes to condensed consolidated financial statements.

2 unchanged sentences

Three Months Ended

Six Months Ended

Other comprehensive income (loss), net of tax:

Change in foreign currency translation income (loss), net of tax

Nine Months Ended

September 30,

$ ( 1,673 ) $ ( 2,887 ) $ ( 19,363 ) $ ( 6,134 )

Other comprehensive income, net of tax:

Change in foreign currency translation income, net of tax

640 3,932 2,489 1,175

Change in unrealized gain on available-for-sale debt investments, net of tax

Total other comprehensive income (loss), net of tax

Comprehensive loss

Total other comprehensive income, net of tax

640 3,937 2,489 1,195

Comprehensive income (loss)

( 1,033 ) 1,050 ( 16,874 ) ( 4,939 )

Comprehensive (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests

Comprehensive loss attributable to AXT, Inc.

( 363 ) ( 798 ) 1,159 ( 636 )

Comprehensive income (loss) attributable to AXT, Inc.

$ ( 1,396 ) $ 252 $ ( 15,715 ) $ ( 5,575 )

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(Unaudited, in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

$ ( 19,363 ) $ ( 6,134 )

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

4 unchanged sentences

Gain from equity method and fair value investments

( 592 ) ( 2,495 )

Deferred tax assets

( 51 ) ( 22 )

Changes in operating assets and liabilities:

Accounts receivable

( 7,700 ) ( 8,526 )

Prepaid expenses and other current assets

4,138 ( 5,823 )

( 3,094 ) 1,173

Accounts payable

( 1,753 ) 3,043

Accrued liabilities

( 2,186 ) ( 1,387 )

Other long-term liabilities

( 5,243 ) ( 5,488 )

Net cash used in operating activities

( 17,073 ) ( 13,382 )

Cash flows from investing activities:

Purchases of property, plant and equipment

( 2,964 ) ( 5,604 )

Proceeds from sales and maturities of available-for-sale debt securities

Investments in non-marketable equity investments

( 837 ) ( 560 )

Net cash used in investing activities

( 3,801 ) ( 4,004 )

Cash flows from financing activities:

1 unchanged sentence

Proceeds from short-term bank loans

43,255 41,582

Payments on short-term bank loans

( 33,634 ) ( 42,295 )

Proceeds from long-term loans

Payments on long-term loans

( 1,141 ) ( 643 )

Net cash provided by financing activities

Effect of exchange rate changes on cash, restricted cash and cash equivalents

Net increase (decrease) in cash, restricted cash and cash equivalents

Net decrease in cash, restricted cash and cash equivalents

( 2,601 ) ( 11,323 )

Cash, restricted cash and cash equivalents at the beginning of the year

33,811 50,114

Cash, restricted cash and cash equivalents at the end of the period

$ 31,210 $ 38,791

Supplemental disclosure of non-cash flow information:

Notes receivables paid to purchase fixed assets

$ 2,699 $ 3,608

Consideration payable in connection with construction in progress, included in accrued liabilities

12 unchanged sentences

Actual results could differ materially from those estimates.

The results of operations for the three and six months ended June 30, 2025 are not necessarily indicative of the results to be expected in the future or for the full fiscal year.

The results of operations for the three and nine months ended September 30, 2025 are not necessarily indicative of the results to be expected in the future or for the full fiscal year.

It is recommended that these condensed consolidated financial statements be read in conjunction with our audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10 -K for the year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on March 14, 2025 .

11 unchanged sentences

Investments in business entities in which we do not have controlling interests, but have the ability to exercise significant influence over operating and financial policies (generally 20 - 50% ownership), are accounted for by the equity method.

As of June 30, 2025 and December 31, 2024 , we have three companies accounted for by the equity method.

As of September 30, 2025 and December 31, 2024 , we have three companies accounted for by the equity method.

In May 2023, we reduced our ownership in Emeishan Jia Mei High Purity Metals Co., Ltd.

3 unchanged sentences

Any future changes to the fair value are recognized through net income (“fair value method”).

In August 2025, our ownership interest in Jia Mei was further diluted to 7.14 % following additional investments by new investors.

For the majority-owned subsidiaries that we consolidate, we reflect the portion we do not own as either noncontrolling interests in stockholder’s equity or as redeemable noncontrolling interests in temporary equity on our condensed consolidated balance sheets and in our condensed consolidated statements of operations.

When warranted by favorable market conditions, we intend to construct facilities at the ChaoYang LiMei location to provide us with additional production capacity.

For the three and six months ended June 30, 2025 , expenses associated with ChaoYang LiMei had a de minimis impact on our condensed consolidated financial statements.

For the three and nine months ended September 30, 2025 , expenses associated with ChaoYang LiMei had a de minimis impact on our condensed consolidated financial statements.

In February 2021, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang XinMei.

51 unchanged sentences

The government approved the approximately $ 49 million investment in its entirety on January 25, 2021, at which time the Investors owned a redeemable noncontrolling interest in Tongmei of 7.28 %.

As of June 30, 2025 , Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

As of September 30, 2025 , Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

We remain the controlling stakeholder of Tongmei and hold a majority of the board of director positions of Tongmei.

3 unchanged sentences

Our investments consist of instruments with original maturities of more than three months.

As of June 30, 2025 and December 31, 2024 , our cash and debt investments are classified as follows (in thousands):

June 30, 2025

As of September 30, 2025 and December 31, 2024 , our cash and debt investments are classified as follows (in thousands):

September 30, 2025

December 31, 2024

5 unchanged sentences

Historically, the gross unrealized losses related to our portfolio of available-for-sale debt securities were immaterial, and primarily due to normal market fluctuations and not due to increased credit risk or other valuation concerns.

There was an insignificant amount of gross unrealized losses on our available-for-sale debt securities as of June 30, 2025 , and historically, such gross unrealized losses have been temporary in nature and we believe that it is probable the principal and interest will be collected in accordance with the contractual terms.

There was an insignificant amount of gross unrealized losses on our available-for-sale debt securities as of September 30, 2025 , and historically, such gross unrealized losses have been temporary in nature and we believe that it is probable the principal and interest will be collected in accordance with the contractual terms.

We review our debt investment portfolio at least quarterly, or when there are changes in credit risks or other potential valuation concerns, to identify and evaluate whether an allowance for credit losses or impairment would be necessary.

Factors considered in determining whether a loss is temporary include the magnitude of the decline in market value, the length of time the market value has been below cost (or adjusted cost), credit quality, and our ability and intent to hold the securities for a period of time sufficient to allow for any anticipated recovery in market value.

We held no available-for-sale debt securities as of June 30, 2025 and December 31, 2024 .

We held no available-for-sale debt securities as of September 30, 2025 and December 31, 2024 .

Restricted Cash

1 unchanged sentence

These balances have been excluded from the Company’s cash balance.

As of June 30, 2025 and December 31, 2024 , $ 8.1 million and $ 11.0 million were included in restricted cash in our condensed consolidated balance sheets, respectively.

As of September 30, 2025 and December 31, 2024 , $ 8.1 million and $ 11.0 million were included in restricted cash in our condensed consolidated balance sheets, respectively.

The decrease in restricted cash primarily reflects the release of restrictions upon the settlement of the related bank loans that were collateralized by such cash balances.

1 unchanged sentence

We have made strategic investments in private companies located in China in order to gain access at a competitive cost to raw materials that are critical to our substrate business (see Note 7 ).

The investment balances for the non-consolidated companies are accounted for under the equity method, included in “Other assets” in the condensed consolidated balance sheets, totaled $ 14.3 million and $ 14.1 million as of June 30, 2025 and December 31, 2024 , respectively.

As of June 30, 2025 , there were three companies accounted for under the equity method.

There were no impairment charges for these investments during the three and six months ended June 30, 2025 and 2024 .

The investment balances for the non-consolidated companies are accounted for under the equity method, included in “Other assets” in the condensed consolidated balance sheets, totaled $ 14.6 million and $ 14.1 million as of September 30, 2025 and December 31, 2024 , respectively.

As of September 30, 2025 , there were three companies accounted for under the equity method.

There were no impairment charges for these investments during the three and nine months ended September 30, 2025 and 2024 .

In May 2023, we reduced our ownership in Jia Mei from 25 % to 10 % by selling a portion of our Jia Mei shares to a third party for approximately $ 827,000 .

6 unchanged sentences

In June 2025, we determined that the fair value had declined, resulting in the recognition of a loss of $ 145,000 .

As of June 30, 2025 , our investments in this unconsolidated company had a carrying value of $ 406,000 and were included in “Other assets” in the condensed consolidated balance sheets.

In September 2025, we recognized a gain of $ 296,000 , reflecting an increase in the estimated fair value of the investment based on an offer from an unrelated buyer to purchase our shares.

As of September 30, 2025 , our investments in this unconsolidated company had a carrying value of $ 702,000 and were included in “Other assets” in the condensed consolidated balance sheets.

Fair Value Measurements

1 unchanged sentence

We review our debt investment portfolio for credit loss at least quarterly or when there are changes in credit risk or other potential valuation concerns.

As of June 30, 2025 and December 31, 2024 , the total unrealized loss, net of tax, included in accumulated other comprehensive income was immaterial.

As of September 30, 2025 and December 31, 2024 , the total unrealized loss, net of tax, included in accumulated other comprehensive income was immaterial.

We believe it is probable the principal and interest will be collected in accordance with the contractual terms, and the unrealized loss on these securities was due to normal market fluctuations, and not due to increased credit risk or other valuation concerns.

10 unchanged sentences

At quarter end, any foreign currency hedges not settled are netted in “Accrued liabilities” on the condensed consolidated balance sheets and classified as Level 3 assets and liabilities.

As of June 30, 2025 , the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact on the condensed consolidated results.

There were no changes in valuation techniques or related inputs in the three and six months ended June 30, 2025 .

There have been no transfers between fair value measurements levels during the three and six months ended June 30, 2025 .

Our investment balance as of June 30, 2025 was $ 0 .

As of September 30, 2025 , the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact on the condensed consolidated results.

There were no changes in valuation techniques or related inputs in the three and nine months ended September 30, 2025 .

There have been no transfers between fair value measurements levels during the three and nine months ended September 30, 2025 .

Our investment balance as of September 30, 2025 was $ 0 .

Items Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

These assets include investments in privately-held companies accounted for by the equity or fair value method (see Note 7 ).

We did not record any other-than-temporary impairment charges for these investments during the three and six months ended June 30, 2025 and 2024 , respectively.

We did not record any other-than-temporary impairment charges for these investments during the three and nine months ended September 30, 2025 and 2024 , respectively.

The components of inventories are summarized below (in thousands):

September 30,

Raw materials

4 unchanged sentences

$ 77,656 $ 85,077

As of June 30, 2025 and December 31, 2024 , carrying values of inventories were net of inventory reserves of $ 26.5 million and $ 24.1 million, respectively, for excess and obsolete inventory and $ 141,000 and $ 73,000 , respectively, for lower of cost or net realizable value reserves.

As of September 30, 2025 and December 31, 2024 , carrying values of inventories were net of inventory reserves of $ 27.1 million and $ 24.1 million, respectively, for excess and obsolete inventory and $ 149,000 and $ 73,000 , respectively, for lower of cost or net realizable value reserves.

Property, Plant and Equipment, Net

The components of our property, plant and equipment are summarized below (in thousands):

September 30,

Property, plant and equipment:

13 unchanged sentences

$ 159,283 $ 159,721

As of June 30, 2025 , the balance of construction in progress was $ 21.6 m illion, of which $ 16.5 m illion was related to our buildings in our new Dingxing and Kazuo locations, $ 1.2 million was for manufacturing equipment purchases not yet placed in service an d $ 3.8 mil lion was for construction in progress for our other consolidated subsidiaries.

As of September 30, 2025 , the balance of construction in progress was $ 21.8 m illion, of which $ 16.8 m illion was related to our buildings in our new Dingxing and Kazuo locations, $ 1.2 million was for manufacturing equipment purchases not yet placed in service an d $ 3.8 mil lion was for construction in progress for our other consolidated subsidiaries.

As of December 31, 2024 , the balance of construction in progress was $ 23.5 million, of which $ 17.9 million was related to our buildings in our Dingxing and Kazuo locations, $ 1.4 million was for manufacturing equipment purchases not yet placed in service and $ 4.3 million was for our construction in progress for our other consolidated subsidiaries.

1 unchanged sentence

The components of accrued liabilities are summarized below (in thousands):

Accrued compensation and related charges

September 30,

Preferred stock dividends payable

$ 2,901 $ 2,901

Accrued compensation and related charges

Payable in connection with construction in progress

Accrued professional services

Other tax payable

Accrued income taxes

Current portion of operating lease liabilities

Accrued product warranty

Accrued income taxes

Advances from customers

Other tax payable

Other personnel-related costs

1 unchanged sentence

Other accrued liabilities

$ 12,502 $ 14,556

Related Party Transactions

22 unchanged sentences

These companies form part of our overall supply chain strategy.

As of June 30, 2025 , the investments are summarized below (in thousands):

As of September 30, 2025 , the investments are summarized below (in thousands):

Investment Balance as of

September 30,

Nanjing JinMei Gallium Co., Ltd.

28 unchanged sentences

The government approved the approximately $ 49 million investment in its entirety on January 25, 2021 at which time the Investors owned a redeemable noncontrolling interest in Tongmei of 7.28 %.

As of June 30, 2025 , Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

As of September 30, 2025 , Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

AXT remains the controlling stakeholder of Tongmei and holds a majority of the Board of Director positions of Tongmei.

2 unchanged sentences

***** In April 2022, Tongmei signed a joint venture agreement with certain investors to fund a new company, ChaoYang KaiMei.

****** In May 2023, we sold 15 % of our equity investments in Jia Mei to a third party.

We now own 10 % of Jia Mei and account for it under the fair value method.

****** In May 2023, we sold 15 % of our equity investments in Jia Mei to a third party, after which we began accounting for the investment under the fair value method.

In August 2025, our ownership interest in Jia Mei was further diluted to 7.14 % following additional investments by new investors.

In May 2023, we reduced our ownership in Jia Mei from 25 % to 10 % by selling a portion of our Jia Mei shares to a third party for approximately $ 827,000 .

4 unchanged sentences

The signed agreement provided a market-based indication of Jia Mei's fair value.

Based on the signed agreement, we recorded an impairment charge of $ 145,000 for Jia Mei investment during the six months ended June 30, 2025 .

Our ownership interest in Jia Mei remained at 10 % as of June 30, 2025, pending the closing of the May 2025 transaction.

Based on the signed agreement, we recorded an impairment charge of $ 145,000 for Jia Mei investment during the nine months ended September 30, 2025 .

In August 2025, the May 2025 transaction was registered and as a result, our ownership interest in Jia Mei was reduced to 7.1 % as of September 30, 2025.

At the end of September 2025, we recognized a gain of $ 296,000 , reflecting an increase in the estimated fair value of the investment based on an offer from another unrelated buyer to purchase our shares in Jia Mei.

Although we have representation on the board of directors of each of the privately held raw material companies, the daily operations of each of these companies are managed by local management and not by us.

Decisions concerning their respective short-term strategy and operations, ordinary course of business capital expenditures and sales of finished product, are made by local management with regular guidance and input from us.

For AXT’s minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our condensed consolidated balance sheets and totaled $ 14.7 million and $ 14.6 million as of June 30, 2025 and December 31, 2024 , respectively.

As of June 30, 2025 , our ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn Gallium Co., Ltd (“Xiaoyi XingAn”) and Jia Mei were 40 %, 39 %, 25 %, and 10 %, respectively.

For AXT’s minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our condensed consolidated balance sheets and totaled $ 15.3 million and $ 14.6 million as of September 30, 2025 and December 31, 2024 , respectively.

As of September 30, 2025 , our ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn Gallium Co., Ltd (“Xiaoyi XingAn”) and Jia Mei were 40 %, 39 %, 25 %, and 7 %, respectively.

These minority investment entities are not considered variable interest entities because:

11 unchanged sentences

AXT’s minority investment entities are not consolidated and are accounted for under the equity method.

The equity investment entities had the following summarized statements of operations information (in thousands) for the three and six months ended June 30, 2025 and 2024 :

The equity investment entities had the following summarized statements of operations information (in thousands) for the three and nine months ended September 30, 2025 and 2024 :

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

$ 8,870 $ 10,473 $ 24,591 $ 27,915

4 unchanged sentences

$ 817 $ 3,443 $ 1,591 $ 8,624

Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was a loss of $ 0.2 million and income of $ 0.6 million, respectively, for the three months ended June 30, 2025 and 2024.

Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was income of $ 0.2 million and $ 1.5 million, respectively, for the six months ended June 30, 2025 and 2024.

Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was income of $ 0.2 million and $ 1.0 million, respectively, for the three months ended September 30, 2025 and 2024 .

Our portion of the income and losses, including impairment charges, from these minority investment entities that are not consolidated and are accounted for under the equity method was income of $ 0.4 million and $ 2.5 million, respectively, for the nine months ended September 30, 2025 and 2024 .

Stockholders ’ Equity

1 unchanged sentence

(in thousands)

The changes in stockholders’ equity by component for the three and six months ended June 30, 2025 are as follows:

The changes in stockholders’ equity by component for the three and nine months ended September 30, 2025 are as follows:

Comprehensive

23 unchanged sentences

3,532 46 242,776 ( 59,470 ) ( 7,170 ) 179,714 22,907 202,621

Net loss and Other comprehensive loss attributable to redeemable noncontrolling interests were $ 433,000 and $ 128,000 , r espectively, for the three months ended June 30, 2025, and $ 1.0 million and $ 181,000 , respectively, for the six months ended June 30, 2025 and are not shown in the table above.

The changes in stockholders’ equity by component for the three and six months ended June 30, 2024 are as follows:

Common stock options exercised

— — 96 — — 96 — 96

Stock-based compensation

— — 708 — — 708 — 708

Tongmei stock-based compensation

— — 26 — — 26 2 28

— — — ( 1,906 ) — ( 1,906 ) 223 ( 1,683 )

Other comprehensive loss

— — — — 510 510 65 575

Balance as of September 30, 2025

$ 3,532 $ 46 $ 243,606 $ ( 61,376 ) $ ( 6,660 ) $ 179,148 $ 23,197 $ 202,345

Net income (loss) and other comprehensive loss attributable to redeemable noncontrolling interests were $ 10,000 and $ 65,000 , r espectively, for the three months ended September 30, 2025 , and ($ 1.0 ) million and $ 246,000 , re spectively, for the nine months ended September 30, 2025 and are not shown in the table above.

The changes in stockholders’ equity by component for the three and nine months ended September 30, 2024 are as follows:

Comprehensive

27 unchanged sentences

3,532 44 239,962 ( 35,639 ) ( 8,227 ) 199,672 23,680 223,352

Net income (loss) and Other comprehensive income (loss) attributable to redeemable noncontrolling interests were $ 1,000 and ($ 69,000 ), respectively, for the three months ended June 30, 2024 and ($ 70,000 ) and ($ 258,000 ), respectively, for the six months ended June 30, 2024 and are not shown in the table above.

There were no reclassification adjustments from accumulated other comprehensive income (loss) for the three and six months ended June 30, 2025 and 2024 .

Common stock options exercised

— 1 2 — — 3 — 3

Stock-based compensation

— — 709 — — 723 — 723

Tongmei stock-based compensation

— — 97 — — 83 7 90

— — — ( 2,937 ) — ( 2,937 ) 190 ( 2,747 )

Other comprehensive income

— — — — 3,189 3,189 372 3,561

Balance as of September 30, 2024

$ 3,532 $ 45 $ 240,770 $ ( 38,576 ) $ ( 5,038 ) $ 200,733 $ 24,249 $ 224,982

Net income (loss) and other comprehensive income (loss) attributable to redeemable noncontrolling interests were ($ 140,000 ) and $ 376,000 , respectively, for the three months ended September 30, 2024 and ($ 210,000 ) and $ 118,000 , respectively, for the nine months ended September 30, 2024 and are not shown in the table above.

There were no reclassification adjustments from accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2025 and 2024 .

Stock Repurchase Program

3 unchanged sentences

No shares were repurchased from 2016 through 2024.

During the three and six months ended June 30, 2025 , we did not repurchase any shares under the approved stock repurchase program.

As of June 30, 2025 , approxima tely $ 2.7 m illion remained available for future repurchases under this program.

During the three and nine months ended September 30, 2025 , we did not repurchase any shares under the approved stock repurchase program.

As of September 30, 2025 , approxima tely $ 2.7 m illion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

2 unchanged sentences

As of December 31, 2015, the Series A preferred stock had cumulative dividends of $ 2.9 million and we included this amount in “Accrued liabilities” in our consolidated balance sheets.

In the quarter ended June 30, 2025 and 2024 , we did not repurchase any of our outstanding common stock.

In the quarter ended September 30, 2025 and 2024 , we did not repurchase any of our outstanding common stock.

If we are required to pay the cumulative dividends on the Series A preferred stock, our cash and cash equivalents would be reduced.

11 unchanged sentences

In May 2025, our stockholders approved our 2025 Equity Incentive Plan (the “2025 Plan”).

The 2025 Plan is a replacement of the 2015 Plan.

The 2025 Plan is a replacement of the 2015 Plan, which expired on April 1, 2025.

The 2015 Plan will continue to govern the awards granted under that Plan.

The 4,313,156 share reserve of the 2015 Plan became the reserve of the 2025 Plan.

7 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Cost of revenue

6 unchanged sentences

$ 738 $ 820 $ 2,017 $ 2,344

We did not capitalize any stock-based compensation to inventory as of June 30, 2025 and December 31, 2024 due to the immateriality of the amount.

We did not capitalize any stock-based compensation to inventory as of September 30, 2025 and December 31, 2024 due to the immateriality of the amount.

We estimate the fair value of stock options using the Black-Scholes option pricing model, consistent with the provisions of ASC 718.

There were no options granted in the three and six months ended June 30, 2025 and 2024 .

The following table summarizes the stock option transactions during the six months ended June 30, 2025 (in thousands, except per share data):

There were no options granted in the three and nine months ended September 30, 2025 and 2024 .

The following table summarizes the stock option transactions during the nine months ended September 30, 2025 (in thousands, except per share data):

Stock Options

2 unchanged sentences

Canceled and expired

Balance as of June 30, 2025

Balance as of September 30, 2025

1,133 $ 5.26 2.50 $ —

Options exercisable as of June 30, 2025

Options exercisable as of September 30, 2025

1,133 $ 5.26 2.50 $ —

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $ 1.41 on March 31, 2025, which would have been received by the option holder had all option holders exercised their options on that date.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $ 4.49 on September 30, 2025 , which would have been received by the option holder had all option holders exercised their options on that date.

Restricted stock awards

A summary of activity related to restricted stock awards for the six months ended June 30, 2025 is presented below (in thousands, except per share data):

A summary of activity related to restricted stock awards for the nine months ended September 30, 2025 is presented below (in thousands, except per share data):

Non-vested as of January 1, 2025

1 unchanged sentence

( 46 ) $ 2.10

Non-vested as of June 30, 2025

As of June 30, 2025 , the unamortized compensation costs related to unvested restricted stock awards was approximatel y $ 3.7 mi llion, which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.4 years.

Non-vested as of September 30, 2025

As of September 30, 2025 , the unamortized compensation costs related to unvested restricted stock awards was approximatel y $ 3.2 mi llion, which is to be amortized on a straight-line basis over a weighted-average period of approximately 1.2 years.

At-Risk, Performance Shares

29 unchanged sentences

Therefore, the maximum number of at-risk performance shares became eligible to vest.

A summary of the status of our unvested at-risk, performance shares as of June 30, 2025 is presented below (in thousands, except per share data):

A summary of the status of our unvested at-risk, performance shares as of September 30, 2025 is presented below (in thousands, except per share data):

Non-vested as of January 1, 2025

( 75 ) $ 2.28

Non-vested as of June 30, 2025

Non-vested as of September 30, 2025

The number of shares presented assumes the achievement of 150 % of a target financial performance metric to be determined by the Company ’ s Compensation Committee and will be subject to an at-risk, performance shares agreement.

As of June 30, 2025 , there was $ 0.5 m illion of unrecognized compensation expense related to unvested at-risk, performance shares that is expected to be recognized over a weighted-average period of 1.6 yea rs.

As of September 30, 2025 , there was $ 0.5 mi llion of unrecognized compensation expense related to unvested at-risk, performance shares that is expected to be recognized over a weighted-average period of 1.3 yea rs.

Net Loss Per Share

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net loss attributable to AXT, Inc.

19 unchanged sentences

2,325 1,518 2,325 1,518

The 883,000 shares of $ 0.001 par value Series A preferred stock issued and outstanding as of June 30, 2025 and December 31, 2024 , valued at $ 3,532,000 , are non-voting and non-convertible preferred stock with a 5.0 % cumulative annual dividend rate payable when declared by the Board of Directors and a $ 4 per share liquidation preference over common stock, which must be paid before any distribution is made to common stockholders.

The 883,000 shares of $ 0.001 par value Series A preferred stock issued and outstanding as of September 30, 2025 and December 31, 2024 , valued at $ 3,532,000 , are non-voting and non-convertible preferred stock with a 5.0 % cumulative annual dividend rate payable when declared by the Board of Directors and a $ 4 per share liquidation preference over common stock, which must be paid before any distribution is made to common stockholders.

These preferred shares were issued to Lyte Optronics, Inc.

11 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Product Type:

6 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Geographical region:

11 unchanged sentences

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

September 30,

Long-lived assets by geographic region, net of depreciation:

4 unchanged sentences

Significant Customers

One customer represented 11 % of our revenue for the three months ended June 30, 2025 and no customer represented 10% of our revenue for the three months ended June 30, 2024 .

Our top five customers, although not the same five customers for each period, represented 32 % and 32 % of our revenue for the three months ended June 30, 2025 and 2024 , respectively.

One customer represented 10% of our revenue for the six months ended June 30, 2025 and 2024.

Our top five customers, although not the same five customers for each period, represented 29 % and 32 % of our revenue for the six months ended June 30, 2025 and 2024 , respectively.

Two customers represented 19 % and 13 %, respectively of our revenue for the three months ended September 30, 2025 and no customer represented 10% of our revenue for the three months ended September 30, 2024 .

Our top five customers, although not the same five customers for each period, represented 45 % and 29 % of our revenue for the three months ended September 30, 2025 and 2024 , respectively.

No customer represented 10% of our revenue for the nine months ended September 30, 2025 and 2024.

Our top five customers, although not the same five customers for each period, represented 32 % and 30 % of our revenue for the nine months ended September 30, 2025 and 2024 , respectively.

We perform ongoing credit evaluations of our customers’ financial condition, and limit the amount of credit extended when deemed necessary, but generally do not require collateral.

One customer accounted for more than 10 % of our accounts receivable balance as of June 30, 2025 and December 31, 2024 , respectively.

Three customers accounted for more than 10% of our accounts receivable balance as of September 30, 2025 and one customer accounted for more than 10% of our accounts receivable balance as of December 31, 2024 .

Commitments and Contingencies

9 unchanged sentences

On a quarterly basis, we review the accrued balances and update the historical warranty cost trends.

The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” in the condensed consolidated balance sheets, during the three and six months ended June 30, 2025 and 2024 (in thousands):

The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” in the condensed consolidated balance sheets, during the three and nine months ended September 30, 2025 and 2024 (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Beginning accrued product warranty

30 unchanged sentences

In certain cases, we may incur a penalty if we cancel the purchase order.

As of June 30, 2025 , we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company.

As of September 30, 2025 , we do not have any outstanding purchase orders that will incur a penalty if cancelled by the Company.

Legal Proceedings

28 unchanged sentences

Other Income (expense), Net

Other income (expense), net for the three months ended June 30, 2025 and 2024 , includes a grant of $ 0.2 million and $ 0.4 million, respectively, from government agencies as awards for technological innovation and job creation.

Other income (expense), net for the six months ended June 30, 2025 and 2024 , includes a grant of $ 0.5 million and $ 1.4 million, respectively, from government agencies as awards for technological innovation and job creation.

In addition, we incurred a foreign currency transaction exchange gain of $ 45,000 and $ 42,000 for the three months ended June 30, 2025 and 2024 , respectively.

We incurred a foreign currency transaction exchange gain of $ 86,000 and $ 100,000 for the six months ended June 30, 2025 and 2024 , respectively.

Other income (expense), net for the three months ended September 30, 2025 and 2024 , includes a grant of $ 0.1 million and $ 0.5 million, respectively, from government agencies as awards for technological innovation and job creation.

Other income (expense), net for the nine months ended September 30, 2025 and 2024 , includes a grant of $ 0.6 million and $ 1.9 million, respectively, from government agencies as awards for technological innovation and job creation.

In addition, we incurred a foreign currency transaction exchange loss of $ 40,000 and a gain of $ 800 for the three months ended September 30, 2025 and 2024 , respectively.

We incurred a foreign currency transaction exchange gain of $ 47,000 and $ 101,000 for the nine months ended September 30, 2025 and 2024 , respectively.

We account for income taxes in accordance with ASC Topic 740, Income Taxes (“ASC 740” ), which requires that deferred tax assets and liabilities be recognized using enacted tax rates for the effect of temporary differences between the book and tax bases of recorded assets and liabilities.

3 unchanged sentences

We recognize interest and penalties related to uncertain tax positions in income tax expense.

Income tax expense for the three and six months ended June 30, 2025 includes no interest and penalties.

As of June 30, 2025 , we have no accrued interest and penalties related to uncertain tax positions.

Income tax expense for the three and nine months ended September 30, 2025 includes no interest and penalties.

As of September 30, 2025 , we have no accrued interest and penalties related to uncertain tax positions.

We file income tax returns in the U.S.

1 unchanged sentence

Currently, there is no tax audit in any of the jurisdictions and we do not expect there will be any significant change to this.

Provision for income taxes for the three and six months ended June 30, 2025 was mostly related to our wholly owned China subsidiaries and our partially owned subsidiaries in China.

Provision for income taxes for the three and nine months ended September 30, 2025 was mostly related to our wholly owned China subsidiaries and our partially owned subsidiaries in China.

Income taxes and certain state taxes, have been provided for our U.S.

33 unchanged sentences

We believe the fair value of our accounts receivable approximates its carrying value due to its short maturities and nominal credit risk.

We do not have any material contract assets as of June 30, 2025 .

We do not have any material contract assets as of September 30, 2025 .

In some contracts we require payment in advance of shipment, per a billing schedule reflected in our customer contracts, and the payment is recorded as a contract liability.

The following table reflects the contract liabilities balance, which is included in “Accrued liabilities” on the condensed consolidated balance sheets, as of June 30, 2025 and December 31, 2024 (in thousands):

The following table reflects the contract liabilities balance, which is included in “Accrued liabilities” on the condensed consolidated balance sheets, as of September 30, 2025 and December 31, 2024 (in thousands):

September 30,

Contract liabilities

$ 506 $ 1,590

During the three and six months ended June 30, 2025, the Company recognized $ 28,000 and $ 1.6 million, respectively, of revenue that was included in the contract balances as of December 31, 2024.

During the three and six months ended June 30, 2024, the Company recognized $ 27,000 and $ 154,000 , respectively, of revenue that was included in the contract balances as of December 31, 2023.

During the three and nine months ended September 30, 2025 , the Company recognized $ 12,000 and $ 1.6 milli on, respectively, of revenue that was included in the contract balances as of December 31, 2024.

During the three and nine months ended September 30, 2024 , the Company recognized $ 9,000 and $ 163,000 , respectively, of revenue that was included in the contract balances as of December 31, 2023.

Disaggregated Revenue

3 unchanged sentences

Our bank loans and credit facilities typically have a term of 12 months or less and are included in “Short-term loans” in our condensed consolidated balance sheets.

The following table represents Short-term bank loans as of June 30, 2025 and December 31, 2024 (in thousands, except interest rate data):

The following table represents Short-term bank loans as of September 30, 2025 and December 31, 2024 (in thousands, except interest rate data):

September 30,

Bank of China (1)

1 unchanged sentence

579 2.7 % March-25

112 2.6 % July-25

705 2.6 % September-25

Bank of China (3)

3 unchanged sentences

2,480 2.5 % February-25

1,410 2.4 % September-25

Bank of Communications (1)

19 unchanged sentences

1,440 3.2 % November-24

142 3.1 % September-25

Industrial Bank (4)

9 unchanged sentences

579 3.8 % June-25

632 3.8 % July-25

428 3.8 % August-25

Industrial and Commercial Bank of China (1)

2,820 3.3 % September-24

281 2.3 % September-25

1,410 2.4 % August-25

421 2.4 % September-25

China Citic Bank (1)

2 unchanged sentences

1,420 2.9 % September-24

4,915 2.3 % September-25

Agricultural Bank of China (1)

1 unchanged sentence

137 2.6 % December-24

Bank of Hangzhou (1)

4,213 2.5 % September-25

Industrial and Commercial Bank of China (1)

1,420 2.8 % September-24

983 2.4 % September-25

1,410 2.2 % September-25

Bank of China (1)

1 unchanged sentence

274 2.4 % December-24

843 2.2 % September-25

Industrial Bank (1)

5 unchanged sentences

419 2.4 % June-25

983 2.3 % September-25

NanJing Bank (1)

5 unchanged sentences

Baoding Tongmei’s land use rights and its building located at its facility in Dingxing, China.

In addition, the loan attracts a guarantee fee amounting to 1.0 % of the loan amount.

Chaoyang JinMei’s land use rights and its building located at its facility in Kazuo, China.

5 unchanged sentences

The intended use of the credit facility is for construction projects.

As of June 30, 2025 , $ 5.0 million is included in “Other long-term liabilities” and $ 0.6 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025 , $ 4.7 million is included in “Other long-term liabilities” and $ 0.7 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In December 2023, one of our consolidated subsidiaries, ChaoYang XinMei secured a loan of approximately $ 2.1 million from an unrelated financing company.

1 unchanged sentence

At the end of the 30 -month contractual period, ChaoYang XinMei holds the option to repurchase the production line and related equipment for $ 14.00 .

As of June 30, 2025 , $ 1.3 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025 , the full remaining amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In February 2025, the Company secured a fourteen -month unsecured bank loan totaling $ 2.7 million at an interest rate of 3.2 %.

As of June 30, 2025 , the full amount is included in “Short-term loans” in our condensed consolidated balance sheets.

As of June 30, 2025 , the maturities of our long-term loan liabilities in five years (including current portion) are as follows (in thousands):

As of September 30, 2025 , the full remaining amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In September 2025, the Company entered into a four -year bank loan totaling $ 0.4 million at an interest rate of 3.1 %.

The loan is secured by the real estate properties owned by JinMei.

As of September 30, 2025 , $ 0.3 million is included in “Other long-term liabilities” and $ 0.1 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025 , the maturities of our long-term loan liabilities in five years (including current portion) are as follows (in thousands):

Maturity of long-term loans

In summary, short-term loans of $ 55.9 million included under “Short-term loans” in our condensed consolidated balance sheet at June 30, 2025 , consisted of $ 51.3 million of short-term bank loans and $ 4.6 million of the current portion of long-term debt.

Long-term loan of $ 5.0 million included under “Other long-term liabilities” in our condensed consolidated balance sheet at June 30, 2025 .

2025 (remaining 3 months)

In summary, short-term loans of $ 61.5 million included under “Short-term loans” in our condensed consolidated balance sheet at September 30, 2025 , consisted of $ 57.0 million of short-term bank loans and $ 4.5 million of the current portion of long-term debt.

Long-term loan of $ 5.0 million included under “Other long-term liabilities” in our condensed consolidated balance sheet at September 30, 2025 .

We lease certain equipment, office space, warehouse and facilities under long-term operating leases expiring at various dates through November 2029.

25 unchanged sentences

The effect of short-term leases on our right-of-use asset and lease liability was not material.

As of June 30, 2025 , the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands):

As of September 30, 2025 , the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands):

Maturity of Lease Liabilities

4 unchanged sentences

The weighted-average remaining lease term and the weighted-average discount rate for our operating leases as of each date is as follows:

September 30,

Weighted-average remaining lease term (years)

2 unchanged sentences

Supplemental cash flow information related to leases where we are the lessee is as follows (in thousands):

Six Months Ended

Nine Months Ended

September 30,

Cash paid for amounts included in the measurement of lease liabilities:

2 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease

2 unchanged sentences

31 46 114 129

$ 192 $ 199 $ 596 $ 588

Redeemable Noncontrolling Interests

16 unchanged sentences

public company.

The components of the change in redeemable noncontrolling interests for the six months ended June 30, 2025 are presented in the following table (in thousands):

The components of the change in redeemable noncontrolling interests for the nine months ended September 30, 2025 are presented in the following table (in thousands):

Balance as of January 1, 2025

4 unchanged sentences

Effect of foreign currency translation attributable to redeemable noncontrolling interests

Balance as of June 30, 2025

Balance as of September 30, 2025

Recent Accounting Pronouncements

12 unchanged sentences

Adoption is expected to have an immaterial effect on our condensed consolidated financial statements.

In July 2025.

FASB issued ASU 2025 - 05, Financial Instruments - Credit Losses (Topic 326 ):

Measurement of Credit Losses for Accounts Receivable and Contract Assets, which allows a practical expedient that assumes current conditions as of the balance sheet date do not change for the remaining life of the asset when developing forecasts for estimating expected credit losses.

The ASU is effective for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years on a prospective basis.

Adoption is expected to have an immaterial effect on our condensed consolidated financial statements.

Subsequent Events

On July 14, 2025, we reported that Ms.

Christine Russell, our independent director, Chair of the Audit Committee, member of the Compensation Committee and the Nominating and Corporate Governance Committee, passed away.

On July 29, 2025, we appointed Leonard J.

Leblanc to the Board of Directors to fill Ms.

Russell’s vacancy effective immediately.

The Board also appointed Mr.

Leblanc to serve on the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee in reliance on the limited exception provided under the Nasdaq Listing Rules.

On July 29, 2025, we also appointed Mr.

Jesse Chan to serve as the Chair of the Audit Committee.

In July 2025, the Company obtained a total of $ 740,000 in unsecured one -year bank loans with interest rates ranging from 2.6 % to 3.8 %.

The company repaid $ 2.8 million on an existing loan.

In October and November 2025, the Company obtained an aggregate of $ 9.5 million from its existing lines of credit, with interest rates ranging from 2.3 % to 3.1 %.

All borrowings are unsecured and mature within one year.

During the same period, the Company repaid a total of $ 9.5 million of existing loans.

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

185 unchanged sentences

An early step in the STAR Market IPO process involved certain entity reorganizations and alignment of assets under Tongmei.

In this regard our two consolidated raw material companies, Nanjing JinMei Gallium Co., Ltd.

(“JinMei”) and Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd.

(“BoYu”) and their subsidiaries were assigned to Tongmei in December 2020.

In this regard our two consolidated raw material companies, JinMei and BoYu and their subsidiaries were assigned to Tongmei in December 2020.

As of June 30, 2021, AXT-Tongmei, Inc., a wholly owned subsidiary of AXT, was assigned to Tongmei.

3 unchanged sentences

Recent statements and regulatory actions by China’s government on the use of VIEs and data security or anti-monopoly concerns have not impacted our ability to conduct our business or continue to list our common stock on the Nasdaq Global Select Market.

The following organization chart depicts the consolidated structure as of June 30, 2025:

The following organization chart depicts the consolidated structure as of September 30, 2025:

The businesses of our PRC subsidiaries and PRC joint ventures are subject to complex and rapidly evolving laws and regulations in the PRC, which can change quickly with little advance notice.

17 unchanged sentences

Tariffs on our products increased to 100%.

In 2024, 8% of our total worldwide revenue was from sales in North America, primarily in the U.S.

Indium phosphide substrates are the primary revenue generator derived from imports into the U.S.

This revenue has been impacted by additional tariffs imposed by the United States and by export controls implemented by China.

As such, in the third quarter of 2025, only approximately 1% of our revenue was generated by sales to customers in North America.

We have little or no germanium imports into the U.S.

and historically a relatively small value of imports of gallium arsenide wafers into the U.S.

In 2024 only 8% of our total worldwide revenue was from sales in North America.

Our primary revenue generator derived from imports into the U.S.

is indium phosphide substrates.

While Tongmei has generally received the required permits for exports to countries in Asia and Europe, our U.S.

1 unchanged sentence

in addition to commercial applications they have significant levels of military involvement.

As such, no permits for gallium arsenide to the U.S.

As such, no permits for the export of gallium arsenide to the U.S.

have yet been approved.

2 unchanged sentences

The portal to apply for exports of indium phosphide from China opened in March and we immediately began to submit our applications.

On June 11, Tongmei was informed that it has satisfied the applicable requirements for a permit to export indium phosphide and has received its initial export permits from the Ministry of Commerce of the People’s Republic of China to resume shipping indium phosphide substrates to certain customers in Europe and Japan.

On June 11, Tongmei was informed that it has satisfied the applicable requirements for a permit to export indium phosphide and received its initial export permits from the Ministry of Commerce of the People’s Republic of China to resume shipping indium phosphide substrates to certain customers in Europe and Japan.

More recently, we have also obtained export permits for indium phosphide shipments to the UK and Canada.

1 unchanged sentence

will be granted.

However, since the requirement for such export permits is new, the timing for when permits will be granted remains uncertain and we are unable to estimate when we will receive the necessary export permits to resume shipping our indium phosphide substrates to the U.S.

However, the timing for receiving permits remains uncertain.

We are actively monitoring and following up on the status of our applications.

17 unchanged sentences

Third, our PRC subsidiaries and PRC joint ventures pay dividends to entities within the Company’s corporate structure.

For the six months ended June 30, 2025, the aggregate dividends paid to the Company, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were $0.9 million.

For the nine months ended September 30, 2025, the aggregate dividends paid to the Company, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were $0.9 million.

For the year ended December 31, 2024, the aggregate dividends paid to the Company, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were approximately $2.4 million.

1 unchanged sentence

All of these distributions were paid to our PRC subsidiaries and the minority shareholders.

For the six months ended June 30, 2025 and the year ended December 31, 2024, no transfers, dividends, or distributions were made between the Company and its PRC subsidiaries, or to investors, except for the settlement of amounts owed under our transfer pricing arrangements in the ordinary course of business.

For the nine months ended September 30, 2025 and the year ended December 31, 2024, no transfers, dividends, or distributions were made between the Company and its PRC subsidiaries, or to investors, except for the settlement of amounts owed under our transfer pricing arrangements in the ordinary course of business.

We have no current intentions to distribute earnings to our investors under our corporate structure.

60 unchanged sentences

Uncollectible receivables are recorded as provision for credit losses when a credit loss is expected through the establishment of an allowance, which would then be written off when all efforts to collect have been exhausted and recoveries are recognized when they are received.

As of June 30, 2025 and December 31, 2024, our accounts receivable, net balance was $22.8 million and $25.6 million, respectively, which was net of an allowance of $147,000 and $147,000, respectively.

As of September 30, 2025 and December 31, 2024, our accounts receivable, net balance was $33.8 million and $25.6 million, respectively, which was net of an allowance of $141,000 and $147,000, respectively.

If actual uncollectible accounts differ substantially from our estimates, revisions to the estimated allowance for credit losses would be required, which could have a material impact on our financial results for the future periods.

2 unchanged sentences

Warranty costs are accrued at the time revenue is recognized.

As of June 30, 2025 and December 31, 2024, accrued product warranties totaled $435,000 and $451,000, respectively.

The decrease in accrued product warranties is primarily attributable to decreased claims for quality issues experienced by customers.

As of September 30, 2025 and December 31, 2024, accrued product warranties totaled $512,000 a nd $451,000, respectively.

The increase in accrued product warranties is primarily attributable to increased claims for quality issues experienced by customers.

If actual warranty costs or pending new claims differ substantially from our estimates, revisions to the estimated warranty liability would be required, which could have a material impact on our financial condition and results of operations for future periods.

4 unchanged sentences

We routinely evaluate the levels of our inventory in light of current market conditions in order to identify excess and obsolete inventory, and we provide a valuation allowance for certain inventories based upon the age and quality of the product and the projections for sale of the completed products.

As of June 30, 2025 and December 31, 2024, we had an inventory reserve of $26.5 million and $24.1 million, respectively, for excess and obsolete inventory and $141,000 and $73,000, respectively, for lower of cost or net realizable value reserves.

As of September 30, 2025 and December 31, 2024, we had an inventory reserve of $27.1 million and $24.1 million, respectively, for excess and obsolete inventory and $149,000 and $73,000, respectively, for lower of cost or net realizable value reserves.

If actual demand for our products were to be substantially lower than estimated, additional inventory adjustments for excess or obsolete inventory might be required, which could have a material impact on our business, financial condition and results of operations.

8 unchanged sentences

Determination of impairment is highly subjective and is based on a number of factors, including an assessment of the strength of each company’s management, the length of time and extent to which the fair value has been less than our cost basis, the financial condition and near-term prospects of the company, fundamental changes to the business prospects of the company, share prices of subsequent offerings, and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in our carrying value.

There was a $145,000 impairment charge related to an investment during the three and six months ended June 30, 2025 and no impairment charge during the six months ended June 30, 2024.

During the three and nine months ended September 30, 2025, we recognized gains from the fair value remeasurement of an equity investment of $296,000 and $151,000, respectively.

No impairment was identified during the nine months ended September 30, 2024.

Fair Value of Investments

12 unchanged sentences

At quarter end any foreign currency hedges not settled are netted in “Accrued liabilities” in the condensed consolidated balance sheets and classified as Level 3 assets and liabilities.

As of June 30, 2025, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the condensed consolidated results.

There have been no transfers between fair value measurement levels during the three and six months ended June 30, 2025 and 2024.

As of September 30, 2025, the net change in fair value from the placement of the hedge to settlement at each month end during the quarter had a de minimis impact to the condensed consolidated results.

There have been no transfers between fair value measurement levels during the three and nine months ended September 30, 2025 and 2024.

Impairment of Long-Lived Assets

4 unchanged sentences

Assets held for sale are carried at the lower of carrying value or estimated net realizable value.

We had no “Assets held for sale” or any impairment of long-lived assets in the condensed consolidated balance sheets as of June 30, 2025 and December 31, 2024.

We had no “Assets held for sale” or any impairment of long-lived assets in the condensed consolidated balance sheets as of September 30, 2025 and December 31, 2024.

Stock-based Compensation

45 unchanged sentences

will be granted.

However, the timing for when permits will be granted remains uncertain and we are unable to estimate when we will receive the necessary export permits to resume shipping our indium phosphide substrates to the U.S.

We are actively monitoring and following-up on the status of our applications.

1 unchanged sentence

remain high and tariffs and controls on exports are changing and fluid.

There can be no assurances that Tongmei will receive China permits to export our wafer substrates or that China will not adopt additional export control regulations that affect our business, financial condition and results of operations.

There can be no assurances that Tongmei will receive the necessary China permits to export our wafer substrates or that China will not adopt additional export control regulations that affect our business, financial condition and results of operations.

Reciprocally, there can be no assurance that the U.S.

44 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Product Type:

3 unchanged sentences

Total revenue

Revenue decreased $10.0 m illion, or 35.6%, to $18.0 mil lion for the three months ended June 30, 2025 from $27.9 million for the three months ended June 30, 2024.

The substrate reve nue decrease fo r the three months ended June 30, 2025 as compared to the same period in 2024 was primarily the res ult of lower demand for InP wafer substrates used for data center applications and in passive optical networks, as a result of export restrictions imposed by the China government and decreased demand for GaAs wafer substrates due to decreased demand across a number of applications and weaker demand for Ge wafer substrates in China.

Raw materials sa les decreased $1.5 m illion, or 18.3%, to $6.7 million for the three months ended June 30, 2025 as compared to the same period in 2024.

T he decrease in raw materials revenue for the three months ended June 30, 2025 as compared to the same period in 2024 was primarily the result o f a decrease in sales of refined gallium and pBN crucibles resulting from weaker market demand.

Revenu e decreased $13.3 m illion , or 26.2%, to $37.3 million for the six months ended June 30, 2025 from $50.6 million for the six months ended June 30, 2024.

The substrate reven ue decrease for the six months ended June 30, 2025 as compared to the same period in 2024 was primarily the result of lower demand for InP wafer substrates used for data center applications and in passive optical networks, as a result of export restrictions imposed by the China government , and decreased demand for GaAs wafer substrates due to decreased demand across a number of applications and weaker demand for Ge wafer substrates in China .

Raw materials sale s increased $1.0 million, or 7.0%, to $15.0 m illion for the six months ended June 30, 2025 as compared to the same period in 2024.

The increase in raw materials revenue for the six months ended June 30, 2025 as compared to the same period in 2024 was primarily the r esult of an increase in sales of refined gallium and from the sale of recycled materials, partially offset by lower demand for pBN crucibles resulting from weaker market demand.

Revenue i ncreased $4.3 m illion, or 18.2%, to $28.0 mil lion for the three months ended September 30, 2025 from $23.6 million for the three months ended September 30, 2024.

The substrate reve nue increase fo r the three months ended September 30, 2025 as compared to the same period in 2024 was primarily the res ult of higher demand for InP wafer substrates used for data center applications and in passive optical networks, as a result of additional export approvals granted by the China government .

Raw materials sales decreased $1.9 m illion, or 22.5%, to $6.7 million for the three months ended September 30, 2025 as compared to the same period in 2024.

T he decrease in raw materials revenue for the three months ended September 30, 2025 as compared to the same period in 2024 was primarily the result o f a decrease in sales of refined gallium and pBN crucibles resulting from weaker market demand.

Revenu e decreased $9.0 m illion , or 12.1%, to $65.3 million for the nine months ended September 30, 2025 from $74.3 million for the nine months ended September 30, 2024.

The substrate reven ue decrease for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily the result of lower demand for InP wafer substrates used for data center applications and in passive optical networks, as a result of export restrictions imposed by the China government , and decreased demand for GaAs wafer substrates due to decreased demand across a number of applications and weaker demand for Ge wafer substrates in China .

Raw materials sale s decreased $0.9 million, or 4.2%, to $21.7 m illion for the nine months ended September 30, 2025 as compared to the same period in 2024.

The decrease in raw materials revenue for the nine months ended September 30, 2025 as compared to the same period in 2024 was primarily the r esult of a decrease in sales of refined gallium and pBN crucibles resulting from weaker market demand, partially offset by demand from the sale of recycled materials.

Revenue by Geographic Region

Three Months Ended

September 30,

($ in thousands)

9 unchanged sentences

Total revenue

Revenue in China decreased $2.5 million for the three months ended June 30, 2025, primarily due to lower demand for our InP and Ge wafer substrates and refined gallium sold by one of our consolidated subsidiaries, partially offset by higher demand for our GaAs wafer substrates.

Revenue in Taiwan decreased $2.9 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates.

Revenue in Japan decreased $0.1 million, primarily due to the impact of China export restrictions on our GaAs and InP wafer substrates, partially offset by higher demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in Asia Pacific decreased $0.3 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates and decreased demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in Europe decreased $3.1 million, primarily due to the impact of China export restrictions on our GaAs, InP and Ge wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in North America decreased $1.1 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Six Months Ended

Revenue in China decreased $0.7 million for the three months ended September 30, 2025, primarily due t o lower demand for our Ge wafer substrates and refined gallium sold by one of our consolidated subsidiaries, partially offset by higher demand for our InP and GaAs wafer substrates.

R evenue in Taiwan increased $6.9 million, primarily due t o additional export approvals granted by the China government .

Revenue in Japan increased $0.2 million, primarily due to additional export approvals granted by the China government .

Revenue in Asia Pacific decreased $0.5 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates, partially offset by increased demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in Europe increased $0.7 million, primarily due to additional export approvals granted by the China government .

R evenue in North America decreased $2.4 million, primarily d ue to the impact of China export restrictions on our InP and GaAs wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Nine Months Ended

September 30,

($ in thousands)

9 unchanged sentences

Total revenue

Revenue in China decrea sed $0.5 million for the six months ended June 30, 2025, primarily due to lower demand for our InP and Ge wafer substrates and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by higher demand for our GaAs wafer substrates and refined gallium sold by one of our consolidated subsidiaries .

Revenue in Taiwan decreased $6.3 million, primarily du e to the impact of China export restrictions on our InP and GaAs wafer substrates.

Revenue in Japan decreased $0.4 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates, partially offset by higher demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in China decreased $1.2 million for the nine months ended September 30, 2025 , primarily due to lower demand for our InP and Ge wafer substrates and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by higher demand for our GaAs wafer substrates and refined gallium sold by one of our consolidated subsidiaries.

Revenue in Taiwan increased $0.7 million, primarily du e to additional export approvals granted by the China government .

Re venue in Asia P acific decreased $0.8 million, p rimarily due to the impact of China export restrictions on our GaAs and InP wafer substrates and refined gallium sold by one of our consolidated subsidiaries, partially offset by higher demand for pBN crucibles sold by one of our consolidated subsidiaries.

Rev enue in Euro pe decreased $4.7 million, pri marily due to the impact of China export restrictions on our GaAs, InP and Ge wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Rev enue in Euro pe decreased $4.0 million, pri marily due to additional export approvals granted by the China government .

Revenue in North America decreased $3.5 million, primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

1 unchanged sentence

Gross Profit %

Gross prof it decreased 6.2 million, or 81.3%, to a profit of $1.4 million for the three months ended June 30, 2025 from $7.7 million for the three months ended June 30, 2024.

The decrease i n gross profit is primarily the resu lt of significant unfavorable yields charged to cost of goods sold in our gallium arsenide production lines.

These charges resulted in a lower gross margin as a percent of revenue.

Further, the export restrictions imposed by China on indium phosphide had a negative impact on product mix and on total substrate revenue.

Sales of indium phosphide wafers were reduced significantly.

Lower substrate revenue resulted in an increase in unabsorbed overhead charged to cost of goods sold.

Gross pr ofit decreased 13.6 million, or 98.6%, to a profit of $0.2 million for the six months ended June 30, 2025 from $13.7 million for the six months ended June 30, 2024.

Gross prof it increased 0.5 million , or 9.5%, to a profit of $6.2 million for the three months ended September 30, 2025 from $5.7 million for the three months ended September 30, 2024.

The increase i n gross profit is attributed to higher revenue resulting in fixed costs being spread over more units and a favorable change in product mix.

Gross pr ofit decreased 1 3.0 million, or 67.0%, to a profit of $6.4 million for the nine months ended September 30, 2025 from $19.4 million for the nine months ended September 30, 2024.

T he decrease in gr oss profit is primarily t he result of significant unfavorable yields charged to cost of goods sold in our gallium arsenide production lines.

5 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

2 unchanged sentences

% of total revenue

Selling, general and administrative expen ses decreased $126,000, or 2.2%, to $5.7 mi llion for the three months ended June 30, 2025 from $5.8 million for the three months ended June 30, 2024.

Th e lower s elling, general and administrative expenses were primarily from a decre ase in legal and professional service expenses, outside commissions and office supply expenses, partially offset by an increase in compensation related expenses.

Selling, general and administrative expen ses decreased $437,000, or 3.6%, to $11.6 m illion for the six months ended June 30, 2025 from $12.0 million for the six months ended June 30, 2024.

Th e lower selli ng, general and administrative expenses were primarily fro m a decrease in compensation related expenses, outside commissions and office supply expenses, partially offset by higher legal and professional service expenses.

Selling, general and administrative expen ses increased $684,000, or 12.1%, to $6.3 mi llion for the three months ended September 30, 2025 from $5.7 million for the three months ended September 30, 2024.

Th e higher s elling, general and administrative expenses were primarily from an incre ase in compensation related costs and legal expenses, partially offset by a decrease in professional service related expenses.

Selling, general and administrative expen ses i ncreased $247,000, or 1.4%, to $17.9 m illion for the nine months ended September 30, 2025 from $17.7 million for the nine months ended September 30, 2024.

Th e higher selli ng, general and administrative expenses were primarily fro m an increase in compensation related expenses and legal expenses, partially offset by lower professional service expenses.

Research and Development

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

2 unchanged sentences

% of total revenue

Research and development exp enses decreased $1.2 million, or 32.8%, to $2.5 million fo r the three months ended June 30, 2025 from $3.8 million for the three months ended June 30, 2024.

The decrease i n research and development expenses for the three months ended June 30, 2025 was primarily d ue to lower product development expenses for crystal ingot processing, partially offset by higher compensation related expenses.

Research and development expen ses decreased $1.3 million, or 19.1%, to $5.6 million for t he six months ended June 30, 2025 from $7.0 million for the six months ended June 30, 2024.

Th e decrease in research and development expenses for the six months ended June 30, 2025 was primarily due to lower product development expenses for crystal ingot processing, partially offset by higher compensation related expenses .

Research and development exp enses decreased $ 2.4 million, or 70.5%, to $1.0 million fo r the three months ended September 30, 2025 from $3.4 million for the three months ended September 30, 2024.

The decrease i n research and development expenses for the three months ended September 30, 2025 was primarily d ue to the use of one-time benefits of certain materials .

Research and development expen ses decreased $3.8 million, or 36.1%, to $6.7 million for t he nine months ended September 30, 2025 from $10.4 million for the nine months ended September 30, 2024.

Th e decrease in research and development expenses for the nine months ended September 30, 2025 was primarily due to the use of one-time benefits of certain materials .

Interest Expense, Net

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

2 unchanged sentences

% of total revenue

Interest expense , net decreased $80,000, or 28.4%, to $202,000 for t he three months ended June 30, 2025 from $282,000 for the three months ended June 30, 2024.

Interest expense, net decreased primarily due to higher interest income d uring the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

Interest expense, net decreased $160,000, or 25.4%, to $471,000 fo r the six months ended June 30, 2025 from $631,000 for the six months ended June 30, 2024.

Interest expense , net decreased primarily due to higher interest income durin g the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.

Gain (loss) from equity method and fair value investments

Interest expense , net increased $4,000, or 1.0%, to $395,000 for t he three months ended September 30, 2025 from $391,000 for the three months ended September 30, 2024.

Interest expense, net increased primarily due to lower interest income duri ng the three months ended September 30, 2025 as compared to the three months ended September 30, 2024.

Interest expense, net decreased $156,000, or 15.3%, to $866,000 fo r the nine months ended September 30, 2025 from $1,022,000 for the nine months ended September 30, 2024.

Interest expense , net decreased primarily due to higher interest income durin g the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024.

Gain from equity method and fair value investments

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

Gain (loss) from equity method and fair value investments

Gain from equity method and fair value investments

% of total revenue

The gain (loss) from equity method and fair value investments was a loss o f $0.2 m illion for the three months ended June 30, 2025 as compared to income of $0.6 million for the three months ended June 30, 2024.

The gain from equity method and fair value investments was income of $0.5 million for the three months ended September 30, 2025 as compared to income of $1.0 million for the three months ended September 30, 2024.

T he decrease in income of $0.5 million is primarily due to weaker performance in unconsolidated joint ventures.

The gain (loss) from equity method and fair value investments was income of $0.1 mil lion for the six months ended June 30, 2025 as compared to income of $1.5 million for the six months ended June 30, 2024.

The gain from equity method and fair value investments was income of $0.6 mil lion for the nine months ended September 30, 2025 as compared to income of $2.5 million for the nine months ended September 30, 2024.

Th e decrease in income o f $1.9 million is primarily due to weaker performance in unconsolidated joint ventures.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

Other income, net

Other income (loss), net

% of total revenue

Other incom e, net decreased $0.5 million, or 95.3%, to an income of $23,000 fo r the three months ended June 30, 2025 from an income of $0.5 million for the three months ended June 30, 2024.

Other incom e, ne t decreased $0 .7 million, or 131.4%, to a loss of $166,000 fo r the three months ended September 30, 2025 from an income of $0.5 million for the three months ended September 30, 2024.

Other income, net decreased p rimarily due to a decrease in government grants.

Other incom e, net decreased $1.1 million, or 75.2%, to an income of $0.4 mi llion for the six months ended June 30, 2025 from an income of $1.5 million for the six months ended June 30, 2024.

Other incom e, net decreased $1.8 million, or 89.7%, to an income of $0.2 mi llion for the nine months ended September 30, 2025 from an income of $2.1 million for the nine months ended September 30, 2024.

Other income, n et decreased prima rily due to a decrease in government grants.

1 unchanged sentence

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

($ in thousands)

2 unchanged sentences

% of total revenue

Provision for income taxes increased $458,000, or 378.5%, to a provision of $579,000 for the three months ended June 30, 2025 as compared to a provision of $121,000 for the three months ended June 30, 2024.

The tax expense recorded for the three months ended June 30, 2025 is the result of mainly foreign taxes and some minimum state taxes.

Provision for income taxes decreased $122,000, or 19.5%, to a provision of $504,000 for the three months ended September 30, 2025 as compared to a provision of $626,000 for the three months ended September 30, 2024.

The tax expense recorded for the three months ended September 30, 2025 is the result of mainly foreign taxes and some minimum state taxes.

No federal income tax is provided for our U.S.

5 unchanged sentences

and China-based operations.

Provision for income taxes increased $258,000, or 65.3%, to a provision of $653,000 for the six months ended June 30, 2025 as compared to a provision of $395,000 for the six months ended June 30, 2024.

The tax expense recorded for the six months ended June 30, 2025 is the result of mainly foreign taxes and some minimum state taxes.

Provision for income taxes increased $136,000, or 13.3%, to a provision of $1.2 million for the nine months ended September 30, 2025 as compared to a provision of $1.0 million for the nine months ended September 30, 2024.

The tax expense recorded for the nine months ended September 30, 2025 is the result of mainly foreign taxes and some minimum state taxes.

No federal income tax is provided for our U.S.

6 unchanged sentences

noncontrolling interests and

Six Months Ended

Nine Months Ended

noncontrolling interests and

September 30,

redeemable noncontrolling interests

September 30,

redeemable noncontrolling interests

3 unchanged sentences

% of total revenue

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interes ts increased $1.0 million or 310.1% to a loss of $0.7 million for the three months ended June 30, 2025, from an income of $317,000 for the three months ended June 30, 2024, primarily due to lower profitability from our PRC subsidiaries as sales decreased.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests increased $2.2 million or 635.2% to a loss of $1.9 mil lion for the six months ended June 30, 2025, from an income of $352,000 for the six months ended June 30, 2024, primarily due to lower profitability from our PRC subsidiaries as sales decreased.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interes ts increased $0.2 million or 366.0% to an income of $0.2 million for the three months ended September 30, 2025, from an income of $50,000 for the three months ended September 30, 2024, primarily du e to higher profitability from our PRC subsidiaries as sales increased.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling interests decreased $2.1 million or 510.7% to a loss of $1.7 mil lion for the nine months ended September 30, 2025, from an income of $402,000 for the nine months ended September 30, 2024, primarily due to lower profitability from our PRC subsidiaries as sales decreased.

Liquidity and Capital Resources

2 unchanged sentences

government securities, certificates of deposit and investment-grade corporate notes and bonds.

As of June 30, 2025, our principal source of liquidity w as $35.1 mil lion, which consisted of cash o f $27.0 m illion and restricted cash of $8.1 m illion.

In the six months ended June 30, 2025, cash and restricted c ash increased by $1.3 m illion.

Th e increase in cash and restricted cash of $1.3 million in the six months ended June 30, 2025 was primarily du e to net cash provided by financing activities of $6.6 million and the effect of exchange rate changes of $4.3 million, partially offset by net cash used in operating activities of $7.9 million and net cash used in investing activities of $1.6 million.

As of June 30, 2025, we and our PRC subsidiaries held approximatel y $29.8 mi llion in cash and investments in foreign bank accounts, of whic h $7.9 mil lion was classified in restricted cash.

As of June 30, 2024, our principal source of liquidity was $43.3 million, which consisted of cash and restricted cash of $41.6 million and investments of $1.7 million.

In the six months ended June 30, 2024, cash and restricted cash decreased by $8.5 million and investments decreased by $0.5 million.

The decrease in cash and restricted cash of $8.5 million in the six months ended June 30, 2024 was primarily due to net cash used in operating activities of $8.0 million and net cash used in investing activities of $4.5 million, partially offset by net cash provided by financing activities of $3.7 million and the effect of exchange rate changes of $0.2 million.

As of June 30, 2024, we and our consolidated joint ventures in China held approximately $35.6 million in cash and investments in foreign bank accounts.

Net cash used in operating activities of $7.9 milli on for the six months ended June 30, 2025 was primarily comprised of a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $17.7 million and gain from equity method and fair value investments of $0.1 million, partially offset by the adjustment for non-cash items of depreciation and amortization of $4.5 million, a net change of $3.3 million in operating assets and liabilities, stock-based compensation of $1.3 million and return of equity method investments as dividends of $0.9 million .

Net cash used in operating activities of $8.0 million for the six months ended June 30, 2024 was primarily comprised of a net change of $11.3 million in operating assets and liabilities, a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $3.2 million, and income from equity method investments of $1.5 million, partially offset by the adjustment for non-cash items of depreciation and amortization of $4.4 million, return of equity method investments as dividends of $2.1 million and stock-based compensation of $1.5 million.

Net cash used in investing activities of $1.6 milli on for the six months ended June 30, 2025 was primarily from the purchase of property, plant and equipment o f $0.8 million and investment in non-marketable equity investments of $0.8 m illion.

Net cash used in investing activities of $4.5 million for the six months ended June 30, 2024 was primarily from the purchase of property, plant and equipment of $4.7 million, and investment in non-marketable equity investments of $0.3 million, partially offset by proceeds from sales and maturities of available-for-sale debt securities of $0.5 million.

Net cash provided by financing activities was $6.6 m illion for the six months ended June 30, 2025, which consisted of proceeds from short-term loan s of $24.4 million and long-term loan of $2.8 million, p artially offset by repayment of short-term loans of $20.2 million and repayment of long-term loan of $0.5 m illion.

Net cash provided by financing activities was $3.7 million for the six months ended June 30, 2024, which consisted of proceeds from short-term loans of $26.5 million, long-term loan of $5.8 million and common stock options exercised of $25,000, partially offset by repayment of short-term loans of $28.3 million and repayment of long-term loan of $0.3 million.

As of September 30, 2025, our principal source of liquidity w as $31.2 mil lion, which consisted of cash o f $23.1 m illion and restricted cash of $8.1 m illion.

In the nine months ended September 30, 2025, cash and restricted c ash decreased by $2.6 m illion.

Th e decrease in cash and restricted cash of $2.6 million in the nine months ended September 30, 2025 was primarily du e to net cash used in operating activities of $17.1 million and net cash used in investing activities of $3.8 million, partially offset by net cash provided by financing activities of $11.8 million and the effect of exchange rate changes of $6.5 million.

As of September 30, 2025, we and our PRC subsidiaries held approximatel y $26.5 mi llion in cash and investments in foreign bank accounts, of whic h $7.9 mil lion was classified in restricted cash.

As of September 30, 2024, our principal source of liquidity was $38.8 million, which consisted of cash of $24.9 million and restricted cash of $13.9 million.

In the nine months ended September 30, 2024, cash and restricted cash decreased by $11.3 million and investments decreased by $2.1 million.

The decrease in cash and restricted cash of $11.3 million in the nine months ended September 30, 2024 was primarily due to net cash used in operating activities of $13.4 million and net cash used in investing activities of $4.0 million, partially offset by net cash provided by financing activities of $4.5 million and the effect of exchange rate changes of $1.6 million.

As of September 30, 2024, we and our PRC subsidiaries held approximately $33.8 million in cash and investments in foreign bank accounts.

Net cash used in operating activities of $17.1 milli on for the nine months ended September 30, 2025 was primarily comprised of a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $19.4 million, a net change of $6.7 million in operating assets and liabilities, and gain from equity method and fair value investments of $0.6 million, partially offset by the adjustment for non-cash items of depreciation and amortization of $6.8 million, stock-based compensation of $2.0 million and return of equity method investments as dividends of $0.9 million .

Net cash used in operating activities of $13.4 million for the nine months ended September 30, 2024 was primarily comprised of a net change of $15.9 million in operating assets and liabilities, a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $6.1 million, and income from equity method investments of $2.5 million, partially offset by the adjustment for non-cash items of depreciation and amortization of $6.7 million, stock-based compensation of $2.3 million and return of equity method investments as dividends of $2.1 million.

Net cash used in investing activities of $3.8 milli on for the nine months ended September 30, 2025 was primarily from the purchase of property, plant and equipment o f $3.0 million and investment in non-marketable equity investments of $0.8 m illion.

Net cash used in investing activities of $4.0 million for the nine months ended September 30, 2024 was primarily from the purchase of property, plant and equipment of $5.6 million, and investment in non-marketable equity investments of $0.6 million, partially offset by proceeds from sales and maturities of available-for-sale debt securities of $2.2 million.

Net cash provided by financing activities was $11.8 m illion for the nine months ended September 30, 2025, which consisted of proceeds from short-term loan s of $43.3 million, long-term loan of $3.2 million and common stock options exercised of $0.1 million , p artially offset by repayment of short-term loans of $33.6 million and repayment of long-term loan of $1.1 m illion.

Net cash provided by financing activities was $4.5 million for the nine months ended September 30, 2024, which consisted of proceeds from short-term loans of $41.6 million, long-term loan of $5.8 million and common stock options exercised of $28,000, partially offset by repayment of short-term loans of $42.3 million and repayment of long-term loan of $0.6 million.

On October 27, 2014, our Board of Directors approved a stock repurchase program pursuant to which we may repurchase up to $5.0 million of our outstanding common stock.

2 unchanged sentences

Since 2015, no shares were repurchased under this program.

As of June 30, 2025, approximatel y $2.7 m illion remained available for future repurchases under this program.

As of September 30, 2025, approximatel y $2.7 m illion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

4 unchanged sentences

As of December 31, 2015, the Series A preferred stock had cumulative dividends of $2.9 million and we include such cumulative dividends in “Accrued liabilities” in our condensed consolidated balance sheets.

As of June 30, 2025, the balance remained unchanged.

As of September 30, 2025, the balance remained unchanged.

At the time we pay this accrued liability, our cash will be reduced.

7 unchanged sentences

If SAFE approval is denied the dividend payable to the Company would be owed but would not be paid.

For the six months ended June 30, 2025 and 2024, the aggregate dividends paid to us, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were $0.9 million and $2.1 million, respectively.

For the six months ended June 30, 2025 and 2024, there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

For the six months ended June 30, 2025, no transfers, dividends, or distributions have been made to date between the Company and its PRC subsidiaries, or to investors, except for the settlement of amounts owed under our transfer pricing arrangements in the ordinary course of business.

For the nine months ended September 30, 2025 and 2024, the aggregate dividends paid to us, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures were $0.9 million and $2.1 million, respectively.

For the nine months ended September 30, 2025 and 2024, there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

For the nine months ended September 30, 2025, no transfers, dividends, or distributions have been made to date between the Company and its PRC subsidiaries, or to investors, except for the settlement of amounts owed under our transfer pricing arrangements in the ordinary course of business.

We have no current intentions to distribute to our investors earnings under our corporate structure.

15 unchanged sentences

Our bank loans and credit facilities typically have a term of 12 months or less and are included in “Short-term loans” in our condensed consolidated balance sheets.

The following table represents short-term bank loans as of June 30, 2025 and December 31, 2024 (in thousands, except interest rate data):

The following table represents short-term bank loans as of September 30, 2025 and December 31, 2024 (in thousands, except interest rate data):

September 30,

Bank of China (1)

9 unchanged sentences

Agricultural Bank of China (1)

Bank of Hangzhou (1)

Industrial and Commercial Bank of China (1)

8 unchanged sentences

Baoding Tongmei’s land use rights and its building located at its facility in Dingxing, China.

In addition, the loan attracts a guarantee fee amounting to 1.0% of the loan amount.

Chaoyang JinMei’s land use rights and its building located at its facility in Kazuo, China.

4 unchanged sentences

The intended use of the credit facility is for construction of fixed assets.

As of June 30, 2025, $5.0 million is included in “Other long-term liabilities” and $0.6 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025, $4.7 million is included in “Other long-term liabilities” and $0.7 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In December 2023, one of our consolidated subsidiaries, ChaoYang XinMei secured a loan of approximately $2.1 million from an unrelated financing company.

1 unchanged sentence

At the end of the 30-month contractual period, ChaoYang XinMei holds the option to repurchase the production line and related equipment for $14.00.

As of June 30, 2025, $1.3 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025, the remaining amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In February 2025, the Company secured a fourteen-month unsecured bank loan totaling $2.7 million at an interest rate of 3.2%.

As of June 30, 2025, the full amount is included in “Short-term loans” in our condensed consolidated balance sheets.

As of September 30, 2025, the remaining amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In September 2025, the Company entered into a four-year bank loan totaling $0.4 million at an interest rate of 3.1%.

The loan is secured by the real estate properties owned by JinMei.

As of September 30, 2025, $0.3 million is included in “Other long-term liabilities” and $0.1 million is included in “Short-term loans” in our condensed consolidated balance sheets.

On November 7, 2025, we filed with the SEC a “shelf” registration statement on Form S-3, pursuant to which we may offer up to $100,000,000 of common stock, preferred stock, debt securities, depositary shares, warrants, subscription rights, purchase contracts and/or units in one or more offerings and in any combination upon its effectiveness.

A prospectus supplement, which we will provide each time we offer securities, will describe the specific amounts, prices and terms of the securities we determine to offer.

We currently expect to use the net proceeds from the sale of securities under the shelf registration statement for working capital, capital expenditures and other general corporate purposes.

We believe that we have adequate cash and investments to meet our operating needs and capital expenditures over the next 12 months.

24 unchanged sentences

Off-Balance Sheet Arrangements

As of June 30, 2025, we did not have any off-balance sheet financing arrangements and have never established any special purpose entities as defined under SEC Regulation S-K Item 303(a)(4)(ii).

As of September 30, 2025, we did not have any off-balance sheet financing arrangements and have never established any special purpose entities as defined under SEC Regulation S-K Item 303(a)(4)(ii).

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