What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2026-03-17 compared with 2025-03-14 · 470 added, 230 removed, 1162 unchanged (38% of the section changed)

20 unchanged sentences

Other Information

Disclosure R egarding Foreign Jurisdictions that Prevent Inspections

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

7 unchanged sentences

The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K.

Certain Relationships and Related Transactio ns and Director Independence

Certain Relationships and Related Transactions and Director Independence

The information required by this item will be included in the Proxy Statement and is incorporated by reference into this Annual Report on Form 10-K.

2 unchanged sentences

Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this report:

The following documents are filed as part of this report:

Financial Statements:

3 unchanged sentences

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Stockholders ’ Equity

8 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of AXT, Inc.

(a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2024, and 2023, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of AXT, Inc (a Delaware corporation) and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

14 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventories – Reserve for Excess and Obsolete Inventory

1 unchanged sentence

The Company’s inventories are stated at the lower of weighted average costs (approximated by standard cost) or net realizable value.

The Company routinely evaluates the levels of its inventories in light of current market conditions in order to identify excess and obsolete inventories, and to provide a reserve for certain inventories to their estimated net realizable value based upon the age, quality and life expectancy of the product, and the projections for sale

of the completed products.

If actual demand were to be substantially lower than estimated, there could be a significant adverse impact on the carrying value of inventories and consolidated results of operations.

2 unchanged sentences

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of internal controls relating to management’s reserve for excess and obsolete inventories, including internal controls over the development of assumptions related to forecasted product demand.

The procedures also included, among others, testing management’s process for developing the reserve for excess and obsolete inventories, testing the completeness and accuracy of the underlying data used in the estimate, and evaluating management’s assumptions of forecasted product demand.

The procedures included, among others, testing management’s process for developing the reserve for excess and obsolete inventories, testing the completeness and accuracy of the underlying data used in the estimate, and evaluating management’s assumptions of forecasted product demand.

Evaluating management’s demand forecast for reasonableness involved considering historical sales or usage by product, comparing prior period estimates to actual results of the same period, and determining whether the demand forecast used was consistent with evidence obtained in other areas of the audit.

6 unchanged sentences

Cash and cash equivalents

$ 120,266 $ 22,833

Restricted cash

Short-term investments

Accounts receivable, net of allowances for credit losses of $ 164 and $ 147 as of December 31, 2025 and December 31, 2024

26,849 25,640

81,651 85,077

Prepaid expenses and other current assets

Total current assets

246,556 158,272

Property, plant and equipment, net

161,860 159,721

Operating lease right-of-use assets

23,353 18,842

$ 433,751 $ 339,314

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 12,947 $ 12,356

Accrued liabilities

14,798 14,556

Short-term loans

62,796 47,264

Total current liabilities

90,541 74,176

Noncurrent operating lease liabilities

1 unchanged sentence

Total liabilities

99,120 84,406

Commitments and contingencies (Note 16)

Redeemable noncontrolling interests (Note 17)

38,056 38,577

Stockholders’ equity:

6 unchanged sentences

Additional paid-in capital

339,922 241,514

Accumulated deficit

( 64,924 ) ( 43,664 )

Accumulated other comprehensive loss

( 5,295 ) ( 8,657 )

Total AXT, Inc.

stockholders’ equity

273,290 192,770

Noncontrolling interests

23,285 23,561

Total stockholders’ equity

296,575 216,331

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$ 433,751 $ 339,314

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATION S

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Year Ended December 31,

$ 88,326 $ 99,361 $ 75,795

Cost of revenue

77,084 75,525 62,477

11,242 23,836 13,318

Operating expenses:

Selling, general and administrative

24,169 24,096 22,806

Research and development

9,049 14,543 12,081

Total operating expenses

Income (loss) from operations

33,218 38,639 34,887

Loss from operations

( 21,976 ) ( 14,803 ) ( 21,569 )

Interest expense, net

( 1,257 ) ( 1,340 ) ( 1,527 )

Equity in income of unconsolidated joint ventures

765 3,439 1,884

Other income, net

Income (loss) before provision for income taxes

924 2,047 2,179

Loss before provision for income taxes

( 21,544 ) ( 10,657 ) ( 19,033 )

Provision for income taxes

Net income (loss)

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

Net income (loss) attributable to AXT, Inc.

1,658 1,134 160

( 23,202 ) ( 11,791 ) ( 19,193 )

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests

1,942 167 1,312

Net loss attributable to AXT, Inc.

$ ( 21,260 ) $ ( 11,624 ) $ ( 17,881 )

Net loss attributable to AXT, Inc.

per common share:

$ ( 0.49 ) $ ( 0.27 ) $ ( 0.42 )

Weighted-average number of common shares outstanding:

43,933 43,154 42,643

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS )

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

Year Ended December 31,

Net income (loss)

Other comprehensive loss, net of tax:

Change in foreign currency translation loss, net of tax

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

Total other comprehensive loss, net of tax

Comprehensive income (loss) attributable to AXT, Inc.

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

Comprehensive income (loss) attributable to AXT, Inc.

$ ( 23,202 ) $ ( 11,791 ) $ ( 19,193 )

Other comprehensive income (loss), net of tax:

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

4,204 ( 3,292 ) ( 3,818 )

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

Total other comprehensive income (loss), net of tax

4,204 ( 3,272 ) ( 3,535 )

Comprehensive loss

( 18,998 ) ( 15,063 ) ( 22,728 )

Comprehensive loss attributable to noncontrolling interests and redeemable noncontrolling interests

1,100 781 1,965

Comprehensive loss attributable to AXT, Inc.

$ ( 17,898 ) $ ( 14,282 ) $ ( 20,763 )

See accompanying notes to consolidated financial statements.

1 unchanged sentence

(In thousands)

Accumulated Other

Comprehensive

4 unchanged sentences

Balance as of January 1, 2023

883 $ 3,532 43,554 44 235,308 ( 14,159 ) ( 3,118 ) 221,607 23,293 244,900

Common stock options exercised

Investment in subsidiary with noncontrolling interest

( 153 ) ( 153 ) 861 708

Investment in subsidiary with redeemable noncontrolling interest

( 155 ) ( 155 ) ( 155 )

Restricted stock awards canceled

Stock-based compensation

2,779 2,779 2,779

Issuance of common stock in the form of restricted stock

1 unchanged sentence

Noncontrolling interest portion of Tongmei stock-based compensation

Investment in subsidiary from noncontrolling interest

( 98 ) ( 98 ) 55 ( 43 )

( 17,881 ) ( 17,881 ) ( 391 ) ( 18,272 )

Other comprehensive loss

( 2,881 ) ( 2,881 ) ( 324 ) ( 3,205 )

Balance as of December 31, 2023

883 3,532 44,239 44 238,452 ( 32,040 ) ( 5,999 ) 203,989 23,494 227,483

Common stock options exercised

Investment in subsidiary with noncontrolling interest

Investment in subsidiary with redeemable noncontrolling interest

12 1 27 28 28

Restricted stock awards canceled

Stock-based compensation

2,647 2,647 2,647

Issuance of common stock in the form of restricted stock

1 unchanged sentence

Noncontrolling interest portion of Tongmei stock-based compensation

( 62 ) ( 62 ) 31 ( 31 )

( 11,624 ) ( 11,624 ) 342 ( 11,282 )

Other comprehensive loss

( 2,658 ) ( 2,658 ) ( 306 ) ( 2,964 )

Balance as of December 31, 2024

883 3,532 45,358 45 241,514 ( 43,664 ) ( 8,657 ) 192,770 23,561 216,331

Common stock options exercised

339 1,605 1,605 1,605

Restricted stock awards canceled

Stock-based compensation

3,109 3,109 3,109

Issuance of common stock in the form of restricted stock

Issuance of common stock, net of stock issuance costs of $ 6,450

8,163 8 93,542 93,550 93,550

Tongmei stock-based compensation

Noncontrolling interest portion of Tongmei stock-based compensation

Other comprehensive loss

( 31 ) ( 31 ) 13 ( 18 )

( 21,260 ) ( 21,260 ) ( 709 ) ( 21,969 )

Other comprehensive income

3,362 3,362 420 3,782

Balance as of December 31, 2025

883 $ 3,532 55,337 $ 55 $ 339,922 $ ( 64,924 ) $ ( 5,295 ) $ 273,290 $ 23,285 $ 296,575

See accompanying notes to consolidated financial statements.

2 unchanged sentences

Cash flows from operating activities:

Net income (loss)

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

$ ( 23,202 ) $ ( 11,791 ) $ ( 19,193 )

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

Depreciation and amortization

9,108 8,979 8,722

Amortization of marketable securities premium

Stock-based compensation

3,292 3,097 3,540

Provision for credit losses

Loss on sale of equity investment

(Gain) loss on disposal of equipment

Loss on disposal of equipment

Return of equity method investments as dividends

868 2,396 4,316

Equity in income of unconsolidated joint ventures

( 765 ) ( 3,439 ) ( 2,050 )

Deferred tax assets

( 88 ) 265 553

Changes in operating assets and liabilities:

Accounts receivable

( 390 ) ( 6,896 ) 9,306

6,347 ( 737 ) 1,073

Prepaid expenses and other current assets

1,389 ( 6,002 ) ( 652 )

( 3,056 ) 1,261 419

Accounts payable

147 3,038 ( 162 )

Accrued liabilities

150 1,004 ( 1,897 )

Other long-term liabilities

( 6,586 ) ( 3,405 ) ( 1,049 )

Net cash provided by (used in) operating activities

( 12,783 ) ( 12,112 ) 3,403

Cash flows from investing activities:

Purchases of property, plant and equipment

Purchases of available-for-sale debt securities

( 5,995 ) ( 5,771 ) ( 10,475 )

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

— 2,160 9,582

Proceeds from sales of equity securities - 15 % Jia Mei

Investments in non-marketable equity investments

( 837 ) ( 834 ) ( 2,538 )

Net cash used in investing activities

( 6,832 ) ( 4,445 ) ( 2,604 )

Cash flows from financing activities:

Proceeds from common stock options exercised

Proceeds from issuance of common stock and options exercised, net of issuance costs

Proceeds from short-term bank loans

58,559 54,501 56,470

Payments on short-term bank loans

( 48,569 ) ( 60,092 ) ( 49,210 )

Proceeds from capital increase in subsidiary shares from noncontrolling interests

Proceeds from long-term loan

3,463 5,831 635

Payments on long-term loan

( 1,513 ) ( 804 ) —

Net cash provided by (used in) financing activities

107,095 ( 536 ) 8,613

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

7,075 790 ( 646 )

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

94,555 ( 16,303 ) 8,766

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

33,811 50,114 41,348

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

$ 128,366 $ 33,811 $ 50,114

Supplemental disclosures:

Income taxes paid, net of refunds

$ 586 $ 962 $ 686

Interest expense paid

$ 1,792 $ 2,069 $ 1,564

Supplemental disclosure of non-cash flow information:

Loan proceeds received by notes receivable

$ — $ — $ 1,481

Notes receivables paid to purchase fixed assets

$ 2,957 $ 4,572 $ 4,170

Non-cash consideration received from sale of DongFang

Conversion of related party borrowings to Additional Paid-in Capital

$ — $ — $ 585

Investment in subsidiary shares from noncontrolling interest

Bank loan proceeds paid directly to a third-party vendor, included in accounts payable

Sales of land and building to unconsolidated joint venture

$ — $ — $ 308

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

$ 1,128 $ 857 $ 6,574

See accompanying notes to consolidated financial statements.

37 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.

For the years ended 2024 and 2023, we have three companies accounted for by the equity method.

For the years ended 2025 and 2024, we ha ve three co mpanies accounted for by the equity method.

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 consolidated balance sheets and in our consolidated statements of operations.

42 unchanged sentences

This new agreement called for additional investment of approximately $ 5.6 million, with Tongmei committing to fund approximately $ 2.3 million.

In December 2023, Tongmei made its initial additional investment of approximately $ 0.6 million in ChaoYang KaiMei, followed by additional investments of approximately $ 0.3 million each in June, July and November 2024.

Tongmei’s ownership of ChaoYang KaiMei remained at 40 % after these equity investments.

44 unchanged sentences

dollar or in the functional currencies of our subsidiaries are included in “Other income, net” for the years presented.

The transaction gain totaled $ 0.1 million, $ 0.2 million and $ 1.6 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The transaction loss totaled $ 74,000 for the year ended December 31, 2025, and the foreign exchange gain totaled $ 0.1 million and $ 0.2 million for the years ended December 31, 2024 and 2023, respectively.

The assets and liabilities of the subsidiaries are translated at the rates of exchange on the balance sheet date.

Revenue and expense items are translated at the average rate of exchange for the period.

Gains and losses from foreign currency translation are included in “Other comprehensive income (loss)”, net of tax in the consolidated statements of comprehensive income (loss).

Gains and losses from foreign currency translation are included in “Other comprehensive income (loss)”, net of tax in the consolidated statements of comprehensive loss.

Revenue Recognition

19 unchanged sentences

Contract liabilities

During the three and twelve months ended December 31, 2024, the Company recognized $ 0 and $ 156,000 , respectively, of revenue that was included in the contract balances as of December 31, 2023.

During the three and twelve months ended December 31, 2023, the Company recognized $ 9,000 and $ 278,000 , respectively, of revenue that was included in the contract balances as of December 31, 2022.

$ 103 $ 1,590

During the year ended December 31, 2025 , the Company recognized $ 1.6 million of revenue that was included in the contract balances as of December 31, 2024 .

During the year ended December 31, 2024 , the Company recognized $ 156,000 of revenue that was included in the contract balances as of December 31, 2023 .

Disaggregated Revenue

23 unchanged sentences

The credit risk in our accounts receivable is mitigated by our credit evaluation process and the geographical dispersion of sales transactions.

One customer accounted for more than 10% of our accounts receivable as of December 31, 2024 and no customer accounted for more than 10% of our accounts receivable as of December 31, 2023.

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

No customer represented 10% of our revenue for the year ended December 31, 2025, 2024 and 2023.

One customer represented 15 % of our revenue for the year ended December 31, 2022.

Our top five customers, although not the same five customers for each period, represented 29 % of our revenue for the year 2025 , 30 % of our revenue for the year 2024 , and 25 % of our revenue for the year 2023 .

For the year ended December 31, 2025 , no third -party customer for the raw materials products from our consolidated subsidiaries accounted for over 10 % of the revenue from raw materials sales.

For the years ended December 31, 2024 and 2023 , two third -party customers for the raw materials products from our consolidated subsidiaries accounted for over 10 % of the revenue from raw materials sales.

For the year ended December 31, 2022, one third-party customer for the raw materials products from our consolidated subsidiaries accounted for over 10% of the revenue from raw materials sales.

Our subsidiaries and raw material joint ventures are a key strategic benefit for us as they further diversify our sources of revenue.

20 unchanged sentences

We evaluate receivables from U.S.

customers with an emphasis on balances in excess of 90

days and for receivables from customers located outside the U.S.

customers with an emphasis on balances in excess of 90 days and for receivables from customers located outside the U.S.

with an emphasis on balances in excess of 120 days and establish a reserve allowance on the receivable balances if needed.

6 unchanged sentences

As of December 31, 2025 and 2024 , our accounts receivable, net balance was $ 26.8 million and $ 25.6 million, respectively, which was net of an allowance of $ 164,000 and $ 147,000 , respectively.

During 2024, we decreased the allowance by $ 432,000 .

During 2025 , we increased the allowance by $ 17,000 .

During 2024 , we decreased the allowance by $ 432,000 .

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.

As of December 31, 2025 and 2024 , the sales returns reserve (included in accrued liabilities) balance was $ 48,000 and $ 28,000 , respectively.

During 2024, we utilized $ 28,000 and reserved an additional $ 17,000 and during 2023, we utilized $ 39,000 and reduced an additional $ 34,000 .

During 2025 , we utilized $ 48,000 and reserved an additional $ 68,000 and during 2024 , we utilized $ 28,000 and reserved an additional $17,000.

Warranty Reserve

12 unchanged sentences

Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life or the term of the lease.

We generally depreciate com puter , soft ware , office equipment , furniture and fixtures over 3 to 5 years , machinery and equipment over 1 to 20 years , automobiles over 5 to 10 years , leasehold and building improvements over 10 years , or the lease term if shorter, and buildings over 39.5 years.

We generally depreciate computer, software, office equipment, furniture and fixtures over 3 to 5 years, machinery and equipment over 1 to 20 years, automobiles over 5 to 10 years, leasehold and building improvements over 10 years, or the lease term if shorter, and buildings over 39.5 years.

Repairs and maintenance costs are expensed as incurred.

17 unchanged sentences

The impairment and divestiture resulted in a total of $ 1.9 million in impairment charges in our consolidated financial results.

There were no impairment charges during the year ended December 31, 2022 and 2024.

For the year ended December 31, 2024 , we had no impairment charges.

During the year ended December 31, 2025 , one of our PRC joint venture raw material companies assessed one of its equity investments was impaired, resulting in an impairment loss of $48,000.

Segment Reporting

20 unchanged sentences

The impact of ASC 740 is more fully described in Note 12.

Comprehensive Income (loss)

The components of other comprehensive income (loss) include unrealized gains and losses on marketable securities and foreign currency translation adjustments.

Comprehensive income (loss) is presented in the consolidated statements of comprehensive income (loss).

The balance of accumulated other comprehensive income (loss) is as follows (in thousands):

Comprehensive Loss

The components of other comprehensive loss include unrealized losses on marketable securities and foreign currency translation adjustments.

Comprehensive loss is presented in the consolidated statements of comprehensive loss.

The balance of accumulated other comprehensive loss is as follows (in thousands):

As of December 31,

2 unchanged sentences

Cumulative translation adjustment

Cumulative translation adjustment attributable to noncontrolling interests and redeemable noncontrolling interests

( 5,732 ) ( 9,514 )

Cumulative translation adjustment attributable to noncontrolling interests

( 437 ) ( 857 )

Accumulated other comprehensive loss attributable to AXT, Inc.

$ ( 5,295 ) $ ( 8,657 )

Net Income (Loss) Per Share

2 unchanged sentences

The dilutive effect of outstanding stock options and restricted stock awards is reflected in diluted earnings per share by application of the treasury stock method.

Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted

stock awards.

Potentially dilutive common shares consist of common shares issuable upon the exercise of stock options and vesting of restricted stock awards.

Potentially dilutive common shares are excluded from the computation of weighted-average number of common shares outstanding in net loss years, as their effect would be anti-dilutive to the computation.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) released ASU 2023-07— Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , aiming to enhance the transparency and relevance of segment information provided in financial statements.

The amendments in this Update require that a public entity disclose significant segment expenses, profit or loss and assets, etc.

for each reportable segment, on an annual and interim basis.

The Update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In December 2023, FASB issued ASU 2023-09— Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023 - 09— Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures , to help investors better understand an entity’s exposure to potential changes in jurisdictional tax legislation and the ensuing risks and opportunities.

1 unchanged sentence

The Update is effective for public business entities for annual periods beginning after December 15, 2024, on a prospective basis.

Adoption of the new standard will have an immaterial effect on our consolidated financial statements.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In March 2024, FASB released ASU 2024 - 01— Compensation — Stock Compensation (Topic 718 ) .

1 unchanged sentence

The update is effective for annual periods beginning after December 15, 2024, and interim periods within those annual periods.

Adoption of the new standard will have an immaterial effect on our consolidated financial statements.

Adoption of the new standard had an immaterial effect on our consolidated financial statements.

In November 2024, FASB issued ASU 2024 - 03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220 - 40 ) , which requires public business entities to disclose additional information on specific expense categories in the notes to the financial statements.

1 unchanged sentence

Adoption is expected to have an immaterial effect on our 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.

In December 2025, FASB issued ASU 2025 - 10, Financial Instruments - Government Grants (Topic 832 ):

Accounting for Government Grants Received by Business Entities , which establishes authoritative guidance on the recognition, measurement, presentation, and disclosure of government grants received by business entities.

The Update provides a framework for determining when a grant should be recognized in income and includes enhanced disclosure requirements.

The Update is effective for fiscal years beginning after December 15, 2028, and interim periods within those fiscal years.

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

Cash, Restricted Cash, Cash Equivalents and Investments

6 unchanged sentences

Cash, restricted cash and cash equivalents

Investments (available-for-sale):

Certificates of deposit 1

Total cash, restricted cash, cash equivalents and investments

Contractual maturities on investments:

Due within 1 year 2

Certificate of deposit with original maturities of less than three months.

Certificate of deposit with original maturities of more than three months.

Classified as “Short-term investments” in our consolidated balance sheets.

Classified as “Long-term investments” in our consolidated balance sheets.

$ 128,366 $ — $ — $ 128,366 $ 33,811 $ — $ — $ 33,811

We manage our debt investments as a single portfolio of highly marketable securities that is intended to be available to meet our current cash requirements.

Certificates of deposit and corporate bonds are typically held until maturity.

As of December 31, 2025 and 2024 , we did not hold any available-for-sale debt securities.

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.

Gross unrealized losses on our available-for-sale debt securities as of December 31, 2023 was $ 20,000 , 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.

The following table summarizes the fair value and gross unrealized losses related to available-for-sale debt securities, aggregated by investment category and length of time that individual debt securities have been in a continuous unrealized loss position as of December 31, 2023 (in thousands):

In Loss Position

Loss Position

As of December 31, 2023

Certificates of deposit

Total in loss position

Investments in Privately Held Raw Material Companies

1 unchanged sentence

The investment balances for the non-consolidated companies, are accounted for under the equity method and included in “Other assets” in the consolidated balance sheets and totaled $ 15.0 million and $14.1million as of December 31, 2025 and 2024 , respectively.

As of December 31, 2024 and 2023, there were three companies accounted for under the equity method, respectively.

As of December 31, 2025 and 2024 , there wer e three c ompanies accounted for under the equity method, respectively.

Fair Value Measurements

14 unchanged sentences

As of December 31, 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 consolidated results.

The following table summarizes our financial assets and liabilities measured at fair value on a recurring basis in accordance with ASC 820 as of December 31, 2023 (in thousands):

Quoted Prices in

Active Markets of

Significant Other

Balance as of

Identical Assets

Observable Inputs

December 31, 2023

Certificates of deposit

As of December 31, 2025 and 2024 , we did not hold any financial assets or liabilities measured at fair value in accordance with ASC 820.

Items Measured at Fair Value on a Nonrecurring Basis

4 unchanged sentences

The impairment and divestiture resulted in a total of $ 1.9 million in impairment charges in our financial results.

We had no impairment charges for 2024 and 2022.

For the year ended December 31, 2024 , we had no impairment charges.

During the year ended December 31, 2025 , we recognized gains from the fair value remeasurement of an equity investment of $ 163,000 .

In the same period, one of our PRC joint venture raw material companies assessed one of its equity investments was impaired, resulting in an impairment loss of $ 48,000 .

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

Raw materials

$ 24,105 $ 31,743

Work in process

53,665 50,779

Finished goods

$ 81,651 $ 85,077

As of December 31, 2025 and 2024 , carrying values of inventories were net of inventory reserves of $ 28.4 million and $ 24.1 million, respectively, for excess and obsolete inventory and $ 180,000 and $ 73,000 , respectively, for lower of cost or net realizable value reserves.

Related Party Transactions

ChaoYang Tongmei purchases raw materials from one of PRC joint ventures, Donghai County Dongfang High Purity Electronic Materials Co., Ltd.

(“Dongfang”) for production in the ordinary course of business.

In November 2023, the Company completed the sale of Dongfang to a third party.

As of December 31, 2024 and 2023, amounts payable of $ 0 and $ 0 , respectively, were included in “Accounts payable” in our consolidated balance sheets.

In September 2021 and October 2021, our consolidated subsidiary, ChaoYang XinMei received funding from a minority investor of $ 0.9 million and $ 1.0 million, respectively.

15 unchanged sentences

In January 2023, ChaoYang KaiMei paid to ChaoYang LiMei $ 1.5 million.

As of December 31, 2024, $ 0 million was included in “Prepaid expenses and other current assets” in our consolidated balance sheets.

As of December 31, 2025 and 2024 , $ 0 million was included in “Prepaid expenses and other current assets” in our consolidated balance sheets.

Our Related Party Transactions Policy seeks to prohibit all conflicts of interest in transactions between related parties and us, unless they have been approved by our Board of Directors.

6 unchanged sentences

Machinery and equipment, at cost

$ 69,909 $ 67,917

accumulated depreciation and amortization

( 47,028 ) ( 44,065 )

Building, at cost

145,952 137,420

accumulated depreciation and amortization

( 31,577 ) ( 26,310 )

Leasehold improvements, at cost

accumulated depreciation and amortization

( 6,981 ) ( 6,347 )

Construction in progress

23,473 23,531

$ 161,860 $ 159,721

As of December 31, 2025 , the balance of construction in progress was $ 23.5 million, of which $ 18.3 million was related to our buildings in our Dingxing and Kazuo locations, $ 1.3 million was for manufacturing equipment purchases not yet placed in service and $ 3.8 million was from our construction in progress for our other consolidated subsidiaries.

7 unchanged sentences

Nanjing JinMei Gallium Co., Ltd.

$ 592 $ 592 Consolidated

ChaoYang JinMei Gallium Co., Ltd.

1,820 1,820 Consolidated

Beijing BoYu Semiconductor Vessel Craftwork Technology Co., Ltd.

1,346 1,346 Consolidated

ChaoYang ShuoMei High Purity Semiconductor Materials Co., Ltd.

3,122 3,122 Consolidated

ChaoYang XinMei High Purity Semiconductor Materials Co., Ltd.

7,331 7,331 Consolidated

$ 14,211 $ 14,211

Beijing JiYa Semiconductor Material Co., Ltd.

$ 4,428 $ 4,867 Equity

Xiaoyi XingAn Gallium Co., Ltd.

5,827 5,304 Equity

ChaoYang KaiMei Quartz Co., Ltd.

4,713 3,895 Equity

$ 14,968 $ 14,066

Emeishan Jia Mei High Purity Metals Co., Ltd.

— 551 Fair value

* These percentages reflect the ownership currently in effect upon the completion of the reorganization in China and the ownership in effect upon the completion of the new capital funding by private equity investors in January 2021.

13 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 the equity ownership of Jia Mei and account for it under the fair value method.

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

Considering our decreased ownership and that we no longer have

significant influence over its operations and financial policies, we adopted the fair value method of accounting to report on the investment in Jia Mei.

****** 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.

We sold the remaining 10 % equity interest in December 2025.

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 .

Considering our decreased ownership and that we no longer have significant influence over its operations and financial policies, we adopted the fair value method of accounting to report on the investment in Jia Mei.

As Jia Mei's equity interest is without a readily determinable fair value, we elected to use the measurement alternative to measure at cost, less any impairment, plus or minus fair value changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

As a result of the share sale, we recognized a gain of $ 575,000 .

Additionally, in accordance with ASC Topic 321, Investments–Equity Securities , we adjusted the investment in Jia Mei to its fair value at the time of the sale.

The gain resulting from the sale and the subsequent remeasurement was incorporated as a component of “Equity in income of unconsolidated joint ventures” in the consolidated statements of operations for the twelve months ended December 31, 2023.

The gain from the sale and the subsequent remeasurement includes the following:

(in thousands)

Fair value of the consideration received

Foreign income tax withholding

Carrying value of 15 % of Emeishan Jia Mei High Purity Metals Co., Ltd.

Gain recognized on sale of 15 % of Emeishan Jia Mei High Purity Metals Co., Ltd.

(in thousands)

Fair value of the retained investment in Emeishan Jia Mei High Purity Metals Co., Ltd.

Carrying value of retained noncontrolling investment ( 10 %)

Gain on retained noncontrolling investment due to remeasurement ( 10 %)

The Jia Mei investment is reviewed for other-than-temporary declines in value on a quarterly basis.

We did not record any other-than-temporary impairment charges for Jia Mei investment during the twelve months ended December 31, 2023.

In November 2023, our 46 % equity ownership interest in Dongfang was sold to a third party for consideration valued at approximately $ 0.6 million, including raw materials, equipment, and vehicle.

As a result, our equity ownership interest of Dongfang decreased from 46 % to 0 %.

The loss resulting from the sale was incorporated as a component of “Equity in income of unconsolidated joint ventures” in the consolidated statements of operations for the twelve months ended December 31, 2023.

The loss from the sale includes the following:

(in thousands)

Fair value of the consideration received

Carrying value of 46 % of Donghai County Dongfang High Purity Electronic Materials Co., Ltd.

Loss recognized on sale of 46 % of Donghai County Dongfang High Purity Electronic Materials Co., Ltd.

In May 2025, two unrelated investors entered into an agreement to invest approximately $ 360,000 each in Jia Mei, in exchange for an 8.9 % ownership per investor.

The signed agreement provided a marketbased indication of Jia Mei's fair value.

Based on the signed agreement, we recorded an impairment charge of $ 145,000 for Jia Mei investment.

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.

In December 2025, we sold our remaining interest in Jia Mei, resulting in a gain of $ 12,000 due to foreign currency exchange rate changes.

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.

1 unchanged sentence

For AXT’s minority investment entities that are not consolidated, the investment balances are included in “Other assets” in our consolidated balance sheets and totaled $ 15.0 million and $ 14.1 million as of December 31, 2025 and 2024 , respectively.

Our respective ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn and Jia Mei was

40 %, 39 %, 25 %, and 10 %, respectively.

Our respective ownership interests in ChaoYang KaiMei, JiYa, Xiaoyi XingAn and Jia Mei was 40 %, 39 %, 25 %, and 0%, respectively.

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

11 unchanged sentences

For the years ended December 31, 2025, 2024 and 2023 , 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 approximately $ 0.9 million, $ 2.4 million and $ 4.3 million, respectively.

In June 2022, July 2022 and August 2022, we received a dividend of $ 1.3 million from BoYu, $ 1.5 million from Xiaoyi XingAn and $ 0.1 million from JiYa, respectively.

In April 2023, Xiaoyi XingAn distributed a dividend of $ 1.8 million to us.

1 unchanged sentence

In May 2024 and November 2024, we received a dividend of $ 2.1 million from Xiaoyi XingAn and $ 0.3 million from JiYa, respectively.

In April 2025, JiYa distributed dividends to us, totaling $ 0.9 million.

For the years ended December 31, 2025 and 2024 , there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

3 unchanged sentences

Our share for the

$ 32,442 $ 37,591 $ 32,544 $ 10,342 $ 11,715 $ 10,033

6,899 17,747 11,698 2,272 5,374 3,365

Operating income

4,139 13,780 10,115 1,292 3,889 2,724

2,179 11,944 8,681 602 3,439 1,884

These minority investment entities that are not consolidated, but rather are accounted for under the equity method, had the following summarized balance sheet information (in thousands) as of December 31, 2025 and 2024 , respectively:

(The 2023 balance sheet information excludes Jia Mei.)

As of December 31,

Current assets

$ 37,709 $ 34,858

Noncurrent assets

23,345 20,975

Current liabilities

6 unchanged sentences

Equity method investments

$ 14,968 $ 14,066

Value added tax receivable, long term

1 unchanged sentence

Deferred tax assets

$ 23,353 $ 18,842

Accrued Liabilities

1 unchanged sentence

As of December 31,

Preferred stock dividends payable

Accrued compensation and related charges

$ 5,090 $ 2,832

Preferred stock dividends payable

Payable in connection with construction in progress

Advances from customers

Accrued professional services

Accrued income taxes

Current portion of operating lease liabilities

Accrued product warranty

Other tax payable

Accrued product warranty

Other personnel-related costs

Accrued income taxes

Advances from customers

Accrual for sales returns

Other accrued liabilities

$ 14,798 $ 14,556

Bank Loans and Line of Credit

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

Our bank loans and credit facilities, which are entered into by our subsidiaries, typically have a term of 12 months or less and are included in “Short-term loan” in our consolidated balance sheets.

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

Bank of China (1)

Bank of China (2)

2.3 % September-24

2.4 % December-24

2.7 % January-25

2.7 % March-25

2.6 % July-25

2.6 % September-25

2.4 % September-25

2.2 % September-25

Bank of China (3)

2.4 % September-24

2.4 % November-24

2.7 % November-24

2.5 % February-25

Bank of Communications (1)

3.0 % June-24

2.6 % June-25

2.4 % December-25

China Merchants Bank (1)

3.5 % January-24

3.5 % February-24

3.5 % April-24

2.9 % January-25

2.9 % March-25

2.4 % June-25

2.3 % September-25

Bank of Beijing (2)

3.0 % March-24

3.0 % June-24

2.7 % March-25

2.6 % June-25

Industrial Bank (1)

3.9 % September-24

3.9 % October-24

3.2 % November-24

2.7 % November-24

3.1 % September-25

2.7 % October-25

2.7 % November-25

2.2 % November-25

Industrial Bank (5)

3.1 % October-25

3.1 % November-25

3.1 % December-25

Industrial Bank (4)

3.8 % March-25

NingBo Bank (1)

4.3 % January-24

3.9 % November-24

3.9 % December-24

3.9 % January-25

3.9 % March-25

3.8 % June-25

3.8 % July-25

3.8 % August-25

3.2 % December-25

Industrial and Commercial Bank of China (1)

NanJing Bank (1)

3.3 % September-24

2.8 % September-24

2.4 % August-25

2.4 % September-25

2.2 % September-25

2.3 % September-25

2.3 % October-25

China Citic Bank (1)

2.9 % June-24

2.9 % July-24

2.9 % September-24

2.3 % September-25

Agricultural Bank of China (1)

Industrial and Commercial Bank of China (4)

Industrial and Commercial Bank of China (1)

Bank of China (1)

NingBo Bank (1)

Industrial Bank (1)

Bank of Communications (1)

2.6 % November-24

2.6 % December-24

2.3 % December-25

Bank of Hangzhou (1)

2.5 % September-25

NanJing Bank (1)

2.8 % December-24

$ 58,550 $ 45,963

Collateral for the above bank loans and line of credit

Not collateralized.

(2) ChaoYang LiMei time deposit.

AXT time deposit.

(4) BoYu’s land use rights and its building located at its facility in Tianjin, China.

In addition, the December 2023 loan attracts a guarantee fee amounting to 0.7 % of the loan amount.

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.

Long-term Loa ns

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

( 5 ) ChaoYang XinMei's manufacturing facility in Kazuo, China.

Long-term Loans

On January 30, 2024, the Company secured a new line of credit amounting to $ 9.7 million, structured as a five -year bank loan.

2 unchanged sentences

In January 2024, the Company borrowed $ 5.8 million against the credit facility.

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

As of December 31, 2024, $ 5.2 million is included in “Other long-term liabilities” and $ 411,000 is included in “Short-term loans” in our consolidated balance sheets.

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

As of December 31, 2025 , $ 4.7 million is included in “Other long-term liabilities” and $ 0.7 million is included in “Short-term loans” in our 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 December 31, 2024, $ 619,000 associated with this financing arrangement is included in “Other long-term liabilities” and $ 890,000 is included in “Short-term loans” in our consolidated balance sheets.

As of December 31, 2025 , $ 0.6 million is included in “Short-term loans” in our 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 December 31, 2025 , $ 2.7 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In September and November 2025, the Company entered into a four -year bank loan totaling $ 0.7 million at an interest rate of 3.1 %.

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

As of December 31, 2025 , $ 0.5 million is included in “Other long-term liabilities” and $ 0.2 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of December 31, 2025 , the maturities of our long-term loan liabilities in five years (including current portion) are as follows (in thousands):

1 unchanged sentence

In summary, short-term loans of $ 62.8 million included under “Short-term loans” in our consolidated balance sheet at December 31, 2025 , consisted of $ 58.5 million of short-term bank loans and $ 4.3 million of the current portion of long-term debt.

Long-term loans of $ 5.8 million included under “Other long-term liabilities” in our consolidated balance sheet at December 31, 2024 consisted of $ 5.2 million in a five-year bank loan and $ 0.6 million in a loan secured by ChaoYang XinMei.

Long-term loans of $ 5.2 million included under “Other long-term liabilities” in our consolidated balance sheet at December 31, 2025 .

Stockholders ’ Equity and Stock Repurchase Program

4 unchanged sentences

on May 28, 1999.

Changes in AXT, Inc.’s ownership interests in consolidated subsidiaries

The effects of changes in the Company’s ownership interests in its less than 100% owned subsidiaries on the Company’s equity are as follows:

As of December 31,

Net loss attributable to AXT, Inc.

Decrease in additional paid-in capital for:

Investment in subsidiary with noncontrolling interest

Change from net loss attributable to AXT, Inc., net of transfers to noncontrolling interests

Changes in AXT, Inc.

’ s ownership interests in consolidated subsidiaries

During 2025 and 2024, there were no changes in the Company’s ownership interests in its consolidated subsidiaries that affected the Company’s equity.

Stock Repurchase Program

7 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 2024, 2023 and 2022, we did no t repurchase any of our outstanding common stock.

In 2025 , 2024 and 2023 , 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.

15 unchanged sentences

The 399,562 share reserve of the 2007 Plan became the reserve of the 2015 Plan, together with 3,000,000 additional shares approved for issuance under the 2015 Plan.

In May 2019, our stockholders approved

1,600,000 of additional shares for issuance under the 2015 Plan.

In May 2019, our stockholders approved 1,600,000 of additional shares for issuance under the 2015 Plan.

In May 2021, our stockholders approved 3,600,000 of additional shares for issuance under the 2015 Plan.

In May 2024, our stockholders approved 3,600,000 of additional shares for issuance under the 2015 Plan.

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

Awards that may be made under the 2015 Plan are stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units, deferred compensation awards and other stock-based awards.

9 unchanged sentences

Balance as of January 1, 2023

1,206 $ 5.09 5.08 $ 630

Canceled and expired

Balance as of December 31, 2023

1,198 $ 5.10 4.09 $ 14

Canceled and expired

Balance as of December 31, 2024

1,175 $ 5.16 3.16 $ —

Canceled and expired

Balance as of December 31, 2025

835 $ 5.33 2.61 $ 9,194

Options exercisable as of December 31, 2025

835 $ 5.33 2.61 $ 9,194

The options outstanding and exercisable as of December 31, 2025 were in the following exercise price ranges (in thousands, except per share data):

4 unchanged sentences

December 31, 2025

Weighted ‑ average

Weighted ‑ Average

Exercise Price

2 unchanged sentences

Exercise Price

$ 3.06 - $ 3.06

297 $ 3.06 3.85 297 $ 3.06

$ 5.21 - $ 5.21

156 $ 5.21 0.82 156 $ 5.21

$ 5.77 - $ 5.77

228 $ 5.77 2.85 228 $ 5.77

$ 7.95 - $ 7.95

30 $ 7.95 1.08 30 $ 7.95

$ 9.50 - $ 9.50

124 $ 9.50 1.82 124 $ 9.50

835 $ 5.33 2.61 835 $ 5.33

There were 339,000 , 12,000 and 4,000 options exercised in the years ended December 31, 2025, 2024 and 2023 , respectively.

The total intrinsic value of options exercised for the years ended December 31, 2024, 2023 and 2022, was $ 29,000 , $ 7,000 and $ 0.8 million, respectively.

As of December 31, 2024, the unamortized compensation costs related to unvested stock options granted to employees under our 2015 plan was $ 0 .

The total intrinsic value of options exercised for the years ended December 31, 2025, 2024 and 2023 , was $ 1.6 million, $ 29,000 and $ 7,000 , respectively.

As of December 31, 2025 , the unamortized compensation costs related to unvested stock options granted to employees under our 2015 and 2025 Plans were $ 0 .

We did not capitalize any stock-based compensation to inventory as of December 31, 2025 and 2024 , as the amount was insignificant.

1 unchanged sentence

A summary of activity related to restricted stock awards for the years ended December 31, 2025, 2024 and 2023 is presented below (in thousands, except per share data):

Weighted-Average

Non-vested as of January 1, 2023

( 446 ) $ 5.25

( 10 ) $ 6.37

Non-vested as of December 31, 2023

( 485 ) $ 4.39

Non-vested as of December 31, 2024

( 957 ) $ 2.77

( 51 ) $ 2.13

Non-vested as of December 31, 2025

16 unchanged sentences

On February 15, 2022, the Compensation Committee recommended, and the Board approved, the grant to Dr.

Morris Young, our Chief Executive Officer, of 113,130 at-risk, performance shares under the Plan.

On February 17, 2021, the Compensation Committee approved the grant to Gary Fischer, our Chief Financial Officer and Corporate Secretary, of 38,475 at-risk, performance shares under the Plan.

On March 14, 2022, the Compensation Committee met and certified that the year-over-year annual revenue growth rate achieved for fiscal year 2021, expressed as a percentage, was 44 %.

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

On February 15, 2022, the Compensation Committee recommended, and the Board approved, the grant to Dr.

Morris Young of 114,320 at-risk, performance shares under the Plan.

16 unchanged sentences

If the target financial metric is exceeded and an additional financial metric for fiscal year 2023 is achieved, then additional shares above the target number of shares are earned based on such performance formula and the maximum number of additional shares earned is capped at 100% of the target.

If the minimum financial metric for fiscal year 2023

is not achieved, then these awards are forfeited.

If the minimum financial metric for fiscal year 2023 is not achieved, then these awards are forfeited.

On February 20, 2024, the Compensation Committee met and certified that the minimum revenue metric for fiscal year 2023 was not achieved.

11 unchanged sentences

A summary of the status of our unvested at-risk, performance shares as of December 31, 2025 is presented below (in thousands, except per share data):

Weighted-Average

Non-vested as of January 1, 2024

( 38 ) $ 15.37

Non-vested as of December 31, 2024

( 151 ) $ 2.28

Non-vested as of December 31, 2025

11 unchanged sentences

Cost of revenue

$ 289 $ 322 $ 414

Selling, general and administrative

2,341 2,295 2,502

Research and development

Net effect on net loss

$ 3,292 $ 3,097 $ 3,540

Shares used in computing basic net income (loss) per share

43,933 43,154 42,643

Shares used in computing diluted net income (loss) per share

43,933 43,154 42,643

Effect on basic net income (loss) per share

$ 0.07 $ 0.07 $ 0.08

Effect on diluted net income (loss) per share

$ 0.07 $ 0.07 $ 0.08

We estimate the fair value of stock options using a Black-Scholes option pricing model.

19 unchanged sentences

We provide for the estimated future costs of warranty obligations in cost of sales when the related revenue is recognized.

The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to

incur to repair or replace product parts that fail while still under warranty.

The accrued warranty costs represent the best estimate at the time of sale of the total costs that we expect to incur to repair or replace product parts that fail while still under warranty.

The amount of accrued estimated warranty costs are primarily based on historical experience as to product failures as well as current information on repair costs.

5 unchanged sentences

Cost of warranty repair

( 366 ) ( 583 )

Ending accrued product warranty

Consolidated income (loss) before provision for income taxes was a loss of $ 10.7 and $ 19.0 million for the years ended December 31, 2024 and 2023, respectively, and income of $ 20.9 million for the year ended December 31, 2022.

Consolidated loss before provision for income taxes was $ 21.5 million, $ 10.7 million and $ 19.0 million for the years ended December 31, 2025, 2024 and 2023 , respectively.

We recorded a current and deferred tax provision of $ 1.7 million, $ 1.1 million, and $ 0.2 million for the years ended December 31, 2025, 2024 and 2023 , respectively.

1 unchanged sentence

Year Ended December 31,

$ — $ 3 $ ( 317 )

1,640 910 ( 62 )

Total current

1,647 931 ( 338 )

( 57 ) 53 514

Total deferred

Total provision for income taxes

A reconciliation of the effective income tax rates and the U.S.

statutory federal income tax rate is summarized below:

$ 1,658 $ 1,134 $ 160

A reconciliation of the provision for income taxes to the amount computed by applying the 21 % statutory U.S.

federal income tax rate to income before income taxes after the adoption of ASU 2023 - 09 is as follows:

Year Ended December 31,

($ in thousands)

federal tax at statutory rate

$ ( 4,524 ) 21.00 %

State and local income tax, net of federal income tax effect *

Foreign Tax Effects

Statutory tax rate difference

1,068 ( 4.96 )

Changes in valuation allowance

4,369 ( 20.28 )

Prior year tax adjustment

Nontaxable or nondeductible items:

Enhanced research deduction

( 1,470 ) 6.82

Changes in valuation allowance

2,262 ( 10.50 )

Nontaxable or nondeductible items:

Stock-based compensation

Total tax expense

$ 1,658 ( 7.7 )%

No state jurisdictions were individually material.

A reconciliation of the provision for income taxes at the federal statutory rate for the years ended December 31, 2024 and 2023 in accordance with the guidance prior to the adoption of ASU 2023 - 09 was as follows:

Year Ended December 31,

Statutory federal income tax rate

21.0 % 21.0 %

State income taxes, net of federal tax benefits

Valuation allowance

( 32.3 ) ( 25.7 )

Stock-based compensation

( 2.4 ) ( 1.7 )

Foreign tax rate differential

3 unchanged sentences

Effective tax rate

( 10.6 )% ( 0.8 )%

Net cash payments for income taxes, disaggregated by jurisdiction were as follows (in thousands):

Year Ended December 31,

US State and local

Income taxes paid, net of amounts refunded

Deferred tax assets and liabilities are summarized below (in thousands):

2 unchanged sentences

Net operating loss carryforwards

$ 21,911 $ 17,220

Accruals, reserves and other

Credit carryforwards

Operating lease liability

Credit carryforwards

Gross deferred tax assets

28,772 22,237

Valuation allowance

( 27,203 ) ( 20,722 )

Total deferred tax assets

1 unchanged sentence

Operating lease right-of-use assets

( 200 ) ( 261 )

Total net deferred tax assets (included in other assets)

$ 1,369 $ 1,254

As of December 31, 2025 we have federal net operating loss (“NOL”) carryforwards of approximately $ 50.5 million, which will begin to expire in 2026.

We have California net operating loss carryforwards of approximately $ 108,000 as of December 31, 2024.

We have California net operating loss carryforwards of approximately $ 0.1 million as of December 31, 2025 , which will begin to expire in 2040.

The deferred tax assets valuation allowance as of December 31, 2025 is attributed to U.S.

1 unchanged sentence

We believe that, based on a number of factors, the available objective evidence creates sufficient uncertainty regarding the realizability of the deferred tax assets such that a full valuation allowance has been recorded.

We also maintain full valuation allowances for certain foreign subsidiaries due to similar uncertainty regarding the realizability of their deferred tax assets.

These factors include our history of losses related to domestic operations, and the lack of carryback capacity to realize deferred tax assets.

These factors include our history of losses related to operations, and the lack of carryback capacity to realize deferred tax assets.

AXT‑TM, our domestic subsidiary, along with certain foreign subsidiaries, maintains only a partial or no valuation allowance based on their respective assessments of realizability.

The valuation allowance increased by $ 6.5 million and $ 3.3 million for the year ended December 31, 2025 and 2024 , respectively.

2 unchanged sentences

In order to retain the preferential tax rate, we must meet certain operating conditions, satisfy certain product requirements, meet certain headcount requirements and maintain certain levels of research expenditures.

We realized benefits from this 10 % reduction in tax rate of $ 348,000 , $ 47,000 and $ 0.9 million for 2024, 2023 and 2022, respectively.

We realized benefits from this 10 % reduction in tax rate of $ 419,100 , $ 348,000 and $ 47,000 for 2025 , 2024 and 2023 , respectively.

As of December 31, 2025 , the favorable tax rate is still valid for the Company and it will stay the same for next year if there is no change of the business nature.

12 unchanged sentences

If there is a change of control, utilization of our NOL or tax credit carryforwards would be subject to an annual limitation under Section 382.

Any limitation may result in expiration of a portion of the NOL or research and development credit

carryforwards before utilization.

Any limitation may result in expiration of a portion of the NOL or research and development credit carryforwards before utilization.

Subsequent ownership changes could further impact the limitation in future years.

11 unchanged sentences

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

On August 9, 2022, Congress passed the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act to strengthen domestic semiconductor manufacturing, design and research, fortify the economy and national security, and reinforce America’s chip supply chains.

The CHIPS Act provides for a new 25% advanced manufacturing investment credit for investments in semiconductor manufacturing and for the manufacture of certain equipment required in the semiconductor manufacturing process.

Since the Company has all its manufacturing in China, the Company will not qualify for the investment credit.

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

The law is intended to address inflation by paying down the national debt, lower consumer energy costs, provide incentives for the production of clean energy and reduce health care costs.

The new law imposes a 1% excise tax on corporate buybacks, and a 15% minimum tax on the adjust financial statement income (AFSI) for corporations with average annual AFSI over a three-tax year period in excess of $1 billion.

The Company does not anticipate the IRA to have a material impact on its financial statements.

Net Income (Loss) per Share

5 unchanged sentences

A reconciliation of the numerators and denominators of the basic and diluted net income per share calculations is as follows (in thousands, except per share data):

Net income (loss) attributable to AXT, Inc.

Net loss attributable to AXT, Inc.

$ ( 21,260 ) $ ( 11,624 ) $ ( 17,881 )

Preferred stock dividends

Net income (loss) available to common stockholders

Denominator for basic net income (loss) per share - weighted-average common shares

( 177 ) ( 177 ) ( 177 )

Net loss available to common stockholders

$ ( 21,437 ) $ ( 11,801 ) $ ( 18,058 )

Denominator for basic net loss per share - weighted-average common shares

43,933 43,154 42,643

Effect of dilutive securities:

1 unchanged sentence

Restricted stock awards

Denominator for dilutive net income (loss) per common shares

Net income (loss) attributable to AXT, Inc.

Denominator for dilutive net loss per common shares

43,933 43,154 42,643

Net loss attributable to AXT, Inc.

per common share:

Options excluded from diluted net income (loss) per share as the impact is anti-dilutive

Restricted stock excluded from diluted net income (loss) per share as the impact is anti-dilutive

$ ( 0.49 ) $ ( 0.27 ) $ ( 0.42 )

Options excluded from diluted net loss per share as the impact is anti-dilutive

834 1,175 1,198

Restricted stock excluded from diluted net loss per share as the impact is anti-dilutive

2,210 1,842 1,258

Segment Information and Foreign Operations

8 unchanged sentences

Product Type:

$ 58,900 $ 67,748 $ 47,466

Raw materials and others

29,426 31,613 28,329

$ 88,326 $ 99,361 $ 75,795

Geographical Information

1 unchanged sentence

Geographical region:

$ 55,076 $ 56,119 $ 39,778

13,039 14,098 8,651

4,906 4,979 4,641

Asia Pacific (excluding China, Taiwan and Japan)

2,441 2,818 3,814

Europe (primarily Germany)

11,156 13,766 12,315

North America (primarily the United States)

1,708 7,581 6,596

$ 88,326 $ 99,361 $ 75,795

Long- lived assets consist primarily of property, plant and equipment, and operating lease right-of-use assets are attributed to the geographic location in which they are located.

3 unchanged sentences

North America

$ 1,040 $ 1,353

162,802 160,847

$ 163,842 $ 162,200

Other income (expense), net

1 unchanged sentence

Foreign exchange gain (loss)

$ ( 74 ) $ 91 $ 169

Income from local China government subsidy

Other income (expense)

1,361 2,239 2,557

Other expense

( 363 ) ( 283 ) ( 547 )

$ 924 $ 2,047 $ 2,179

Commitments and Contingencies

19 unchanged sentences

On November 27, 2024, Defendants again moved to dismiss.

The motion to dismiss is fully briefed and pending before the Court.

On March 17, 2025, the Court granted our motion to dismiss, holding that the plaintiff did not make a pre-suit demand on our Board of Directors and failed to plead with particularity facts sufficient to excuse the lack of a demand and also for failure to state a claim.

On April 11, 2025, the plaintiff filed a notice that he did not intend to further amend his complaint.

The Court entered judgment on April 14, 2025.

On May 13, 2025, Plaintiffs appealed to the Court of Appeals for the Ninth Circuit, which the parties are currently briefing.

It is not possible at this time to reasonably assess the final outcomes of these litigations or to reasonably estimate the possible loss or range of loss with respect to these litigations.

15 unchanged sentences

A lease is classified as an operating lease if it does not meet any one of these criteria.

All of our leases

are classified as operating leases and substantially all of our operating leases are comprised of equipment and office space leases.

All of our leases are classified as operating leases and substantially all of our operating leases are comprised of equipment and office space leases.

None of our leases are classified as, finance leases.

19 unchanged sentences

Weighted-average discount rate

5.00 % 5.02 %

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

24 unchanged sentences

The total investment targeted by BoYu in Kazuo is approximately $ 8 million in value, assets and capital.

Unaudited Quarterly Consolidated Financial Data

Not applicable.

Redeemable Noncontrolling Interests

18 unchanged sentences

Balance as of January 1, 2024

Investment in subsidiary with redeemable noncontrolling interest

Equity issuance costs incurred

11 unchanged sentences

Subsequent Events

In January, February and March 2025, the Company obtained a total of $ 8.4 million in new one-year bank loans with interest rates ranging from 2.5 % to 3.9 %.

Of the $ 8.4 million, $ 6.0 million is unsecured, while the remaining $ 2.4 million is collateralized by real estate.

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

The Company repaid $ 7.4 million of existing loans in January and February 2025 .

In January 2026, the Company placed a deposit of $ 8.0 million to secure a PRC bank loan obtained by its subsidiary.

The deposit serves as collateral for the borrowing and is classified as restricted cash.

Form 10-K Summary

5 unchanged sentences

Certificate of Amendment to the Restated Certificate of Incorporation

Certificate of Designation, Preferences and Rights of Series A Preferred Stock (which is incorporated herein by reference to Exhibit 2.1 to the registrant’s form 8-K dated May 28, 1999).

Certificate of Designation, Preferences and Rights of Series A Preferred Stock

Second Amended and Restated By Laws

3 unchanged sentences

Form of Indemnification Agreement for directors and officers

2007 Equity Incentive Plan (amended December 8, 2008)

Forms of agreements under the 2007 Equity Incentive Plan

Amended and Restated Employment Offer Letter between the Company and Dr.

5 unchanged sentences

and certain investors

Schedule identifying agreements substantially identical to the form of Capital Increase Agreement filed as Exhibit 10.11 hereto

Schedule identifying agreements substantially identical to the form of Capital Increase Agreement filed as Exhibit 10.8

Form of First Supplemental Agreement between Beijing Tongmei Xtal Technology Co., Ltd.

and certain investors

Schedule identifying agreements substantially identical to the form of First Supplemental Agreement filed as Exhibit 10.12 hereto

Schedule identifying agreements substantially identical to the form of First Supplemental Agreement filed as Exhibit 10.9

Form of Second Supplemental Agreement between Beijing Tongmei Xtal Technology Co., Ltd.

13 unchanged sentences

Special Commitment Letter for Disclosure of Shareholders’ Information and Verification of Retired Personnel of CSRC

Computation of Ratio of Earnings to Fixed Charges

2025 Equity Incentive Plan

Form of Lock-Up Agreement

Computation of Ratio to Earnings to Fixed Charges

Insider Trading Policy

4 unchanged sentences

Certification by principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certification by Chief Einsiderxecutive Officer Pursuant to 18 U.S.C.

Certification by Chief Executive Officer Pursuant to 18 U.S.C.

Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

16 unchanged sentences

Incorporated by reference to exhibit 3.1 to registrant’s Form 8-K filed with the SEC on October 26, 2010.

(8) Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on October 31, 2014.

Incorporated by reference to exhibit 4.1 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

(10) Incorporated by reference to exhibit 10.20 to registrant’s Form 10-K filed with the SEC on March 22, 2010.

Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on October 31, 2014.

Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on December 4, 2012.

2 unchanged sentences

Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on February 26, 2016.

Incorporated by reference to exhibit 10.8 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.8(a) to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.9 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.9(a) to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.10 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.10(a) to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.11 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.12 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.13 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.14 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.15 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.16 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.17 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.18 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.19 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.20 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.21 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.22 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on May 16, 2025.

Incorporated by reference to exhibit 10.1 to registrant’s Form 8-K filed with the SEC on December 30, 2025.

Incorporated by reference to exhibit 19.1 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Incorporated by reference to exhibit 97.1 to registrant’s Form 10-K filed with the SEC on March 14, 2025.

Management contract or compensatory plan.

22 unchanged sentences

March 17, 2026

/s/ Christine Russell

/s/ Leonard LeBlanc

March 17, 2026

Christine Russell

Leonard LeBlanc

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-K

Item 9A. Controls and Procedures