What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-13 · 329 added, 717 removed, 1158 unchanged (47% 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 $ 141 and $ 147 as of September 30, 2025 and December 31, 2024

Short-term investments

Accounts receivable, net of allowances for credit losses of $ 164 and $ 164 as of March 31, 2026 and December 31, 2025

32,016 26,849

28 unchanged sentences

2,000 shares authorized;

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)

883 shares issued and outstanding as of March 31, 2026 and December 31, 2025 (Liquidation preference of $ 8,273 and $ 8,229 as of March 31, 2026 and December 31, 2025)

Common stock, $ 0.001 par value;

70,000 shares authorized;

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

55,579 and 55,237 shares issued and outstanding as of March 31, 2026 and December 31, 2025

Additional paid-in capital

17 unchanged sentences

Three 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

Gross profit (loss)

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

( 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

Interest income (expense), net

Equity in income of unconsolidated joint ventures

Other income, net

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

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, net of tax

640 3,937 2,489 1,195

Comprehensive income (loss)

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

Comprehensive loss

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

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

Comprehensive income (loss) attributable to AXT, Inc.

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

Comprehensive loss attributable to AXT, Inc.

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(Unaudited, in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

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

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

Depreciation and amortization

Amortization of marketable securities premium

Stock-based compensation

Gain on disposal of equipment

Return of equity method investments as dividends

Gain from equity method and fair value investments

( 592 ) ( 2,495 )

Equity in income of unconsolidated joint ventures

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

Purchases 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

1 unchanged sentence

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

9 unchanged sentences

Our management has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with U.S.

Due to the COVID- 19 pandemic, there has been uncertainty and disruption in the global economy and financial markets.

Such estimates and assumptions are based on historical experience, known trends and events and various other factors that management believes to be reasonable under the circumstances.

These estimates and assumptions may change as new events occur and additional information is obtained.

Actual results could differ materially from those estimates.

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.

The results of operations for the three months ended March 31, 2026 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, 2025 filed with the Securities and Exchange Commission (the “SEC”) on March 17, 2026 .

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 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.

(“Jia Mei”) from 25 % to 10 % by selling a portion of our Jia Mei shares to a third party for approximately $ 827,000 .

As a result of our decreased ownership and the fact that we do not have the ability to exercise significant influence over Jia Mei’s operations, as of May 2023, we no longer reported Jia Mei as an equity investment in our condensed consolidated balance sheets.

Our Jia Mei investment was re-measured to fair value at the time of sale.

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.

As of March 31, 2026 and December 31, 2025 , we have three companies 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 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 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.

The agreement called for a total investment of approximately $ 3.0 million, of which Tongmei would fund approximately $ 1.8 million for a 58.5 percent ownership of ChaoYang XinMei.

In February 2021, Tongmei and the investors completed the initial funding of approximately $ 1.5 million.

Tongmei’s portion of the investment was approximately $ 0.9 million.

In May 2021, Tongmei and the investors completed the funding of the remaining balance of approximately $ 1.5 million.

Tongmei’s portion of the final investment was approximately $ 0.9 million, for a total investment of approximately $ 1.8 million for a 58.5 percent ownership of ChaoYang XinMei.

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

In December 2021 and January 2022, ChaoYang XinMei received funding from Tongmei of $ 1.4 million and $ 1.4 million, respectively.

In January 2022, the China local government certified this additional funding in ChaoYang XinMei as an equity investment.

In April 2022, Tongmei entered into a capital increase agreement (the “Capital Increase Agreement”) with minority investors to further invest approximately $ 4.5 million in ChaoYang XinMei.

Tongmei’s portion of the investment was approximately $ 2.6 million, of which $ 1.1 million was invested in April 2022 and $ 0.8 million was invested in May 2022.

The minority investors’ portion of the investment was approximately $ 1.9 million, of which $ 0.7 million was invested in April 2022 and $ 0.6 million was invested in May 2022.

As a result, noncontrolling interests increased $ 1.4 million and redeemable noncontrolling interests increased $ 0.1 million.

In July 2022, Tongmei and the minority investors further invested $ 0.8 million and $ 0.6 million in ChaoYang XinMei, respectively.

This completed the investment obligations under the Capital Increase Agreement.

As a result, noncontrolling interests increased $ 610,000 and redeemable noncontrolling interests increased $ 57,000 .

Tongmei’s ownership remained at 58.5 % after these equity investments.

In April 2022, ChaoYang JinMei signed a joint venture agreement with certain investors to fund a new company, ChaoYang ShuoMei, our consolidated subsidiary (the “ChaoYang ShuoMei Joint Venture Agreement”).

The ChaoYang ShuoMei Joint Venture Agreement called for a total investment of approximately $ 4.4 million, of which ChaoYang JinMei would fund approximately $ 3.3 million for a 75 percent ownership of ChaoYang ShuoMei.

In July and August 2022, ChaoYang JinMei completed the initial funding of $ 1.0 million in ChaoYang ShuoMei.

In August 2022, the investor invested $ 334,000 in ChaoYang ShuoMei.

As a result, noncontrolling interests increased $ 406,000 and redeemable noncontrolling interests increased $ 73,000 .

In January 2023, ChaoYang ShuoMei received $ 0.5 million in funding from ChaoYang JinMei and $ 0.2 million in funding from one of the minority investors.

As a result, noncontrolling interests increased $ 0.2 million and redeemable noncontrolling interests increased $ 36,000 .

In May 2023, ChaoYang ShuoMei received $ 1.0 million in funding from ChaoYang JinMei and $ 0.3 million in funding from one of the minority investors.

As a result, noncontrolling interests increased $ 0.4 million and redeemable noncontrolling interests increased $ 75,000 .

In August 2023, ChaoYang ShuoMei received $ 0.6 million in funding from ChaoYang JinMei and $ 0.2 million in funding from one of the minority investors.

As a result, noncontrolling interests increased $ 0.2 million and redeemable noncontrolling interests increased $ 44,000 .

ChaoYang JinMei has completed its investment obligations under the ChaoYang ShuoMei Joint Venture Agreement.

ChaoYang JinMei’s ownership of ChaoYang ShuoMei remained at 75 % after these equity investments.

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

(“ChaoYang KaiMei”) (the “ChaoYang KaiMei Joint Venture Agreement”), which called for a total investment of approximately $ 7.6 million, of which Tongmei would fund approximately $ 3.0 million for a 40 percent ownership of ChaoYang KaiMei.

In July 2022, Tongmei and the investors completed the initial funding of approximately $ 2.2 million.

Tongmei’s portion of the investment was approximately $ 0.9 million.

In January 2023, Tongmei made an investment of $ 0.9 million to ChaoYang KaiMei.

In each of July 2023 and August 2023, Tongmei made an investment of approximately $ 0.6 million in ChaoYang KaiMei.

In September 2023, Tongmei entered into another joint venture agreement with the same group of investors.

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 and July 2024, and in March, April and May 2025 .

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

All activities for MaAnShan JinMei ceased during the first half of 2022 and the subsidiary was subsequently dissolved in May 2022.

The dissolution of MaAnShan JinMei had a de minimis impact on the condensed consolidated results.

During the quarter ended December 31, 2020, Tongmei entered into two sets of definitive transaction documents, each consisting of a capital increase agreement along with certain supplemental agreements in substantially the same form (collectively, the “Capital Investment Agreements”), with several private equity investors in China.

In preparation for Tongmei’s application for a listing of shares in an initial public offering (the “IPO”) on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”), in late December 2020, we reorganized our entity structures in China.

JinMei and BoYu and their subsidiaries were assigned to Tongmei and effectively merged with Tongmei although they retained their own respective legal entity status and are wholly owned subsidiaries of Tongmei.

The 33 % minority interest stakeholders of BoYu converted their ownership to a 7.59 % minority interest in Tongmei.

The 8.5 % minority interest stakeholders, employees of JinMei, converted their ownership to a 0.38 % minority interest in Tongmei.

Further, a number of employees, key managers and contributors purchased a 0.4 % minority interest in Tongmei.

Additionally, Baoding Tongmei and ChaoYang Tongmei, were assigned to Tongmei as wholly owned subsidiaries.

In 2020, the private equity funds (the “Investors”) had transferred approximately $ 48.1 million of new capital to Tongmei.

An additional investment of approximately $ 1.5 million of new capital was funded in January 2021.

Under China regulations these investments must be formally approved by the appropriate government agency and are not deemed to be dilutive until such approval is granted.

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 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.

In June 2021, we sold AXT-Tongmei to Tongmei for $ 1 .

Since Tongmei is 85.5 % owned by us, and the transaction was between common interest holders, the transaction was accounted for at net book value and resulted in an increase of $ 1.2 million to noncontrolling interests and $ 1.2 million to redeemable noncontrolling interests.

There have been no material changes to the Company’s basis of consolidation, significant accounting policies, or the composition of its consolidated subsidiaries and equity method investments from those disclosed in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2025 .

Investments and Fair Value Measurements

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

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

September 30, 2025

As of March 31, 2026 and December 31, 2025 , our cash and debt investments are classified as follows (in thousands):

March 31, 2026

December 31, 2025

2 unchanged sentences

$ 57,869 $ — $ — $ 57,869 $ 128,366 $ — $ — $ 128,366

Investments (available-for-sale):

Certificates of deposit 1

7,880 ( 26 ) 7,854 — — — —

Corporate bonds

57,964 2 ( 445 ) 57,521 — — — —

Corporate equity securities

Total cash, restricted cash, cash equivalents and investments

$ 123,713 $ 2 $ ( 471 ) $ 123,244 $ 128,366 $ — $ — $ 128,366

Contractual maturities on investments:

Due within 1 year 2

$ 5,040 $ 5,030 $ — $ —

Due after 1 through 5 years 2

60,804 60,345 — —

$ 65,844 $ 65,375 $ — $ —

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

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

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.

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 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 September 30, 2025 and December 31, 2024 .

Short-term investments are classified as current assets based on their contractual maturities or the Company's ability and intent to liquidate the investments within the next twelve months to fund the expansion of its production capacity.

The following table summarizes the fair value and gross unrealized losses that do not have an allowance for credit losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2026 (in thousands):

In Loss Position

Loss Position

As of March 31, 2026

Certificates of deposit

$ 7,854 $ ( 26 ) $ — $ — $ 7,854 $ ( 26 )

Corporate bonds

52,117 ( 445 ) — — 52,117 ( 445 )

Total in loss position

$ 59,971 $ ( 471 ) $ — $ — $ 59,971 $ ( 471 )

Restricted Cash

1 unchanged sentence

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

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.

As of March 31, 2026 and December 31, 2025 , $ 16.1 million and $ 8.1 million were included in restricted cash in our condensed consolidated balance sheets, respectively.

The increase in restricted cash was primarily attributable to additional deposits pledged as collateral in connection with borrowings by the Company’s subsidiaries from PRC banks.

Investments in Privately-held Raw Material Companies

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 $ 14.6 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 .

As a result of our decreased ownership and the fact that we do not have the ability to exercise significant influence over Jia Mei’s operations, we adopted the fair value method of accounting to report on the investment in Jia Mei.

Our investments under the fair value method are reviewed for other-than-temporary declines in value on a quarterly basis.

We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable.

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

Additionally, in accordance with Accounting Standards Codification (“ASC”) 321 - 10 - 35 - 2, we adjusted the investment in Jia Mei to its fair value at the time of the sale, which resulted in a gain of $ 383,000 .

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 condensed consolidated statements of operations in the second quarter of 2023.

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

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.

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 $ 15.5 million and $ 15.0 million as of March 31, 2026 and December 31, 2025 , respectively.

As of March 31, 2026 , there were three companies accounted for under the equity method.

There were no impairment charges for these investments during the three months ended March 31, 2026 and 2025 .

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

As of March 31, 2026 and December 31, 2025 , 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 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 .

As of March 31, 2026 , 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 months ended March 31, 2026 .

There have been no transfers between fair value measurements levels during the three months ended March 31, 2026 .

Items Measured at Fair Value on a Nonrecurring Basis

Certain assets that are subject to nonrecurring fair value measurements are not included in the table above.

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 nine months ended September 30, 2025 and 2024 , respectively.

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

We did not record any other-than-temporary impairment charges for these investments during the three months ended March 31, 2026 and 2025 , respectively.

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

September 30,

Raw materials

$ 26,764 $ 31,743

Work in process

48,705 50,779

Finished goods

$ 77,656 $ 85,077

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.

As of March 31, 2026 and December 31, 2025 , carrying values of inventories were net of inventory reserves o f $ 29.8 m illion and $ 28.4 million, respectively, for excess and obsolete inventory and $ 71,000 an d $ 180,000 , 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

$ 164,622 $ 161,860

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 March 31, 2026 , the balance of construction in progress wa s $ 25.4 m illion, of whic h $ 18.7 m illion was related to our buildings in our new Dingxing and Kazuo locatio ns, $ 1.4 milli on was for manufacturing equipment purchases not yet placed in service and $ 5.3 mill ion was for construction in progress for our other consolidated subsidiaries.

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 for our construction in progress for our other consolidated subsidiaries.

1 unchanged sentence

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

September 30,

Preferred stock dividends payable

$ 2,901 $ 2,901

Accrued compensation and related charges

$ 3,550 $ 5,090

Preferred stock dividends payable

Payable in connection with construction in progress

Accrued professional services

Advances from customers

Accrued income taxes

Current portion of operating lease liabilities

Accrued product warranty

Advances from customers

Accrued professional services

Other tax payable

Accrued product warranty

Other personnel-related costs

26 unchanged sentences

These companies form part of our overall supply chain strategy.

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

As of March 31, 2026 , the investments are summarized below (in thousands):

Investment Balance as of

September 30,

Nanjing JinMei Gallium Co., Ltd.

16 unchanged sentences

$ 15,464 $ 14,968

Emeishan Jia Mei High Purity Metals Co., Ltd.

702 551 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.

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

As of March 31, 2026 , 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, 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 .

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.

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

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 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 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 $ 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.

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 totale d $ 15.5 m illion and $ 15.0 million as of March 31, 2026 and December 31, 2025 , respectively.

As of March 31, 2026 , our ownership interests in ChaoYang KaiMei, JiYa, and Xiaoyi XingAn Gallium Co., Ltd (“Xiaoyi XingAn”) were 40 %, 39 %, and 25 %, respectively.

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

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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 nine months ended September 30, 2025 and 2024 :

The equity investment entities had the following summarized statements of operations information (in thousands) for the three months ended March 31, 2026 and 2025 :

Three Months Ended

Nine Months Ended

September 30,

$ 9,174 $ 8,658

2 unchanged sentences

$ 1,399 $ 1,282

Net income (loss)

$ 1,247 $ 971

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 .

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 $ 0.2 million, respectively, for the three months ended March 31, 2026 and 2025 .

Stockholders ’ Equity

1 unchanged sentence

(in thousands)

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

The changes in stockholders’ equity by component for the three months ended March 31, 2026 are as follows:

Comprehensive

5 unchanged sentences

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

Stock-based compensation

— — 563 — — 563 — 563

Tongmei stock-based compensation

— 1 70 — — 71 6 77

— — — ( 8,798 ) — ( 8,798 ) ( 610 ) ( 9,408 )

Other comprehensive loss

— — — — 431 431 53 484

Balance as of March 31, 2025

3,532 46 242,147 ( 52,462 ) ( 8,226 ) 185,037 23,010 208,047

Stock-based compensation

— — 607 — — 607 — 607

Tongmei stock-based compensation

— — 22 — — 22 2 24

— — — ( 7,008 ) — ( 7,008 ) ( 233 ) ( 7,241 )

Other comprehensive loss

— — — — 1,056 1,056 128 1,184

Balance as of June 30, 2025

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

Common stock options exercised

2 unchanged sentences

— — 1,035 — — 1,035 — 1,035

Tongmei stock-based compensation

— — — ( 1,620 ) — ( 1,620 ) 148 ( 1,472 )

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

Other comprehensive loss

— — — — 691 691 143 834

Balance as of September 30, 2025

Balance as of March 31, 2026

$ 3,532 $ 56 $ 342,434 $ ( 66,544 ) $ ( 4,604 ) $ 274,874 $ 23,576 $ 298,450

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:

N et loss an d other comprehe nsive loss attrib utable to redeemable noncontrolling interests wer e $ 13,000 and $ 144,000 , r espectively, for the three months ended March 31, 2026 , and are not shown in the table above.

The changes in stockholders’ equity by component for the three months ended March 31, 2025 are as follows:

Comprehensive

5 unchanged sentences

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

Common stock options exercised

Noncontrolling interest portion of Tongmei stock-based compensation

— 1 ( 13 ) — — ( 12 ) 6 ( 6 )

8 unchanged sentences

$ 3,532 $ 46 $ 242,147 $ ( 52,462 ) $ ( 8,226 ) $ 185,037 $ 23,010 $ 208,047

Common stock options exercised

— — 5 — — 5 — 5

Stock-based compensation

— — 621 — — 621 — 621

Tongmei stock-based compensation

— — 79 — — 79 7 86

— — — ( 1,516 ) — ( 1,516 ) 316 ( 1,200 )

Other comprehensive income

— — — — ( 601 ) ( 601 ) ( 69 ) ( 670 )

Balance as of June 30, 2024

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

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 .

Net loss and other comprehensive loss attributable to redeemable noncontrolling interests were $ 608,000 and $ 53,000 , respectively, for the three months ended March 31, 2025 and are not shown in the table above.

There were no reclassification adjustments from accumulated other comprehensive income (loss) for the three months ended March 31, 2026 and 2025 .

Stock Repurchase Program

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During 2015, we repurchased approximately 908,000 shares at an average price of $ 2.52 per share for a total purchase price of approximately $ 2.3 million under the stock repurchase program.

No shares were repurchased from 2016 through 2024.

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.

No shares were repurchased during 2025, 2024 and 2023 under this program.

During the three months ended March 31, 2026 , we did not repurchase any shares under the approved stock repurchase program.

As of March 31, 2026 , approxim ately $ 2.7 mi llion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

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

In the quarter ended March 31, 2026 and 2025 , 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.

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Three Months Ended

Nine Months Ended

September 30,

Cost of revenue

$ 50 $ 73 $ 159 $ 246

Selling, general and administrative

585 623 1,535 1,702

Research and development

103 124 323 396

Net effect on net loss

$ 1,035 $ 646

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 did not capitalize any stock-based compensation to inventory as of March 31, 2026 and December 31, 2025 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 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):

There were no options granted in the three months ended March 31, 2026 and 2025 .

The following table summarizes the stock option transactions during the three months ended March 31, 2026 (in thousands, except per share data):

Stock Options

2 unchanged sentences

Canceled and expired

Balance as of September 30, 2025

Balance as of March 31, 2026

559 $ 5.31 2.47 $ 28,888

Options exercisable as of September 30, 2025

Options exercisable as of March 31, 2026

559 $ 5.31 2.47 $ 28,888

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.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $ 56.98 on March 31, 2026 , 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 nine months ended September 30, 2025 is presented below (in thousands, except per share data):

A summary of activity related to restricted stock awards for the three months ended March 31, 2026 is presented below (in thousands, except per share data):

Non-vested as of January 1, 2026

1 unchanged sentence

( 38 ) $ 2.45

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.

Non-vested as of March 31, 2026

As of March 31, 2026 , the unamortized compensation costs related to unvested restricted stock awards was approximate ly $ 6.0 mi llion, which is to be amortized on a straight-line basis over a weighted-average period of approximatel y 1.6 yea rs.

At-Risk, Performance Shares

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The fair value of the at-risk, performance shares is determined based on the closing price of the Company’s common stock on the first day after the public issuance of the Company’s earnings release for the most recent fiscal quarter, following the Compensation Committee and Board of Directors approval, which is considered the grant date.

The fair value per share of the at-risk, performance shares classified as equity awards granted in February 2024 and March 2023 was $ 2.28 and $ 3.71 , respectively.

On March 15, 2023, the Compensation Committee recommended, and the Board approved, the grant to Dr.

The fair value per share of the at-risk, performance shares classified as equity awards granted in February 2025 and February 2024 was $ 2.23 and $ 2.28 , respectively.

On February 20, 2024, the Compensation Committee recommended, and the Board approved, the grant to Dr.

Morris Young of 223,590 at-risk, performance shares under the Plan.

On March 15, 2023, the Compensation Committee approved the grant to Gary Fischer of 77,600 at-risk, performance shares under the Plan.

On February 20, 2024, the Compensation Committee approved the grant to Gary Fischer of 77,600 at-risk, performance shares under the Plan.

If the minimum financial metric for fiscal year 2024 is achieved, then based upon a performance formula, a corresponding portion of the 223,590 shares issued to Dr.

1 unchanged sentence

Fischer would be eligible to vest.

If the target financial metric was 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 target financial metric is exceeded, 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 2024 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.

Therefore, none of the at-risk performance shares became eligible to vest.

On February 18, 2025, the Compensation Committee met and certified that the year-over-year annual revenue growth rate achieved for fiscal year 2024, expressed as a percentage, was 200 %.

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

On February 18, 2025, the Compensation Committee recommended, and the Board approved, the grant to Dr.

7 unchanged sentences

On February 18, 2026, the Compensation Committee met and certified that the year-over-year annual revenue growth rate achieved for fiscal year 2025, expressed as a percentage, was 195.15 %.

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 September 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 March 31, 2026 is presented below (in thousands, except per share data):

Non-vested as of January 1, 2026

( 73 ) $ 2.23

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 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.

Non-vested as of March 31, 2026

As of March 31, 2026 , there wa s $ 0.4 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 1.4 yea rs.

Net Loss Per Share

6 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Net loss attributable to AXT, Inc.

16 unchanged sentences

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

1,133 1,186 1,133 1,186

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

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 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.

The 883,000 shares of $ 0.001 par value Series A preferred stock issued and outstanding as of March 31, 2026 and December 31, 2025 , 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 p er 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

Nine Months Ended

September 30,

Product Type:

2 unchanged sentences

$ 26,924 $ 19,356

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

Geographical Information

1 unchanged sentence

Three Months Ended

Nine Months Ended

September 30,

Geographical region:

$ 16,565 $ 13,426

9,045 2,140 10,796 10,142

1,854 1,623 3,276 3,409

Asia Pacific (excluding China, Taiwan and Japan)

347 797 1,555 2,307

Europe (primarily Germany)

3,424 2,720 7,122 11,134

North America (primarily the United States)

$ 26,924 $ 19,356

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

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

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

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.

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 .

No customer represented 10% of our revenue for the three months ended March 31, 2026 and 2025 .

Our top five customers, although not the same five customers for each period, represented 32 % and 36 % of our revenue for the three months ended March 31, 2026 and 2025 , 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 collate ral.

One custom er accounted for more than 10% of our accounts receivable balance as of March 31, 2026 and December 31, 2025 .

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 nine months ended September 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 months ended March 31, 2026 and 2025 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

Beginning accrued product warranty

$ 435 $ 421 $ 451 $ 703

Accruals for warranties issued

98 94 199 282

Adjustments related to pre-existing warranties including expirations and changes in estimates

94 9 173 ( 251 )

Cost of warranty repair

1 unchanged sentence

Ending accrued product warranty

$ 512 $ 392 $ 512 $ 392

Contractual Obligations

20 unchanged sentences

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

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

As of March 31, 2026 , w e do not hav e any outstanding purchase orders that will incur a penalty if cancelled by the Company.

Legal Proceedings

6 unchanged sentences

The court transferred the case to the Northern District of California, where our headquarters are located.

A lead plaintiff was appointed and an amended complaint was filed, asserting a putative class period from March 24, 2021 and April 3, 2024, inclusive (the “Class Period”).

The amended complaint alleged violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b - 5 promulgated thereunder by the defendants, and sought unspecified monetary relief, interest, and attorneys’ fees.

On November 8, 2024, Defendants moved to dismiss.

The Court granted the motion to dismiss with leave to amend on May 28, 2025, holding that the plaintiffs failed to state a claim.

Plaintiffs filed a second amended complaint on June 27, 2025, asserting the same claims as in the prior complaint.

On July 11, 2025, Defendants again moved to dismiss.

A lead plaintiff was appointed and an amended complaint was filed.

The amended complaint asserts a putative class period from March 24, 2021 and April 3, 2024, inclusive (the “Class Period”).

The amended complaint alleges violations of Sections 10 (b) and 20 (a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b - 5 promulgated thereunder by the defendants, and seeks unspecified monetary relief, interest, and attorneys’ fees.

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

10 unchanged sentences

The Court entered judgment on April 14, 2025.

On May 13, 2025, Plaintiffs filed a notice of appeal.

It is not possible at this time to reasonably assess the final outcome of the putative shareholder class action or to reasonably estimate the possible loss or range of loss with respect to that litigation.

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.

We believe these claims to be meritless and intend to vigorously defend against them.

Other Income (expense), Net

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.

Other Income, Net

Other income, net for the three months ended March 31, 2026 and 2025 , includes a grant of $ 0.2 million and $ 0.3 million, respectively, from government agencies as awards for technological innovation and job creation.

In addition, we incurred a foreign currency transaction exc hange loss of $ 174,000 and a gain of $ 41,000 for the three months ended March 31, 2026 and 2025 , 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 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.

Income tax expense for the three months ended March 31, 2026 includes no interest and penalties.

As of March 31, 2026 , 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 nine months ended September 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 months ended March 31, 2026 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 September 30, 2025 .

We do not have any material contract assets as of March 31, 2026 .

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 September 30, 2025 and December 31, 2024 (in thousands):

September 30,

The following table reflects the contract liabilities balance, which is included in “Accrued liabilities” on the condensed consolidated balance sheets, as of March 31, 2026 and December 31, 2025 (in thousands):

Contract liabilities

$ 506 $ 1,590

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.

During the three months ended March 31, 2026 , the Company recogn ized $ 16,000 of rev enue that was included in the contract balances as of December 31, 2025 .

During the three months ended March 31, 2025 , the Company recognized $ 1.5 million of revenue that was included in the contract balances as of December 31, 2024 .

Disaggregated Revenue

2 unchanged sentences

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 loans” in our condensed consolidated balance sheets.

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)

$ 689 2.7 % January-25

579 2.7 % March-25

112 2.6 % July-25

705 2.6 % September-25

Bank of China (3)

1,410 2.4 % September-24

1,370 2.4 % November-24

685 2.7 % November-24

2,480 2.5 % February-25

1,410 2.4 % September-25

Bank of Communications (1)

1,376 3.0 % May-24

2,480 3.0 % June-24

1,420 2.5 % June-25

2,023 2.6 % June-25

China Merchants Bank (1)

1,386 3.5 % January-24

692 3.5 % February-24

692 3.5 % April-24

3,155 2.9 % January-25

978 2.9 % March-25

Bank of Beijing (2)

3,600 3.0 % March-24

3,580 3.0 % June-24

2,204 2.7 % March-25

1,405 2.6 % June-25

3,627 2.6 % June-25

Industrial Bank (1)

2,820 3.9 % September-24

2,679 3.9 % October-24

1,440 3.2 % November-24

142 3.1 % September-25

Industrial Bank (4)

1,380 3.8 % March-25

NingBo Bank (1)

1,647 4.3 % January-24

1,258 4.3 % May-24

1,822 3.9 % November-24

550 3.9 % December-24

1,584 3.9 % January-25

689 3.9 % March-25

628 3.9 % Apr-25

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)

2,752 2.9 % June-24

2,820 2.9 % July-24

1,420 2.9 % September-24

4,915 2.3 % September-25

Agricultural Bank of China (1)

1,235 2.6 % November-24

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)

1,145 2.3 % September-24

274 2.4 % December-24

843 2.2 % September-25

Industrial Bank (1)

1,370 2.7 % November-24

Bank of Communications (1)

274 3.0 % May-24

767 2.6 % June-25

China Merchants Bank (1)

419 2.4 % June-25

983 2.3 % September-25

NanJing Bank (1)

1,370 2.8 % December-24

$ 57,003 $ 45,963

Collateral for the above bank loans and line of credit

Not collateralized.

AXT time deposit.

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

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

Short-term Loans

Our bank loans and credit facilities are primarily entered into by our subsidiaries with various PRC banks and generally have original maturities of 12 months or less.

These borrowings are classified as “Short-term loans” in our condensed consolidated balance sheets.

As of March 31, 2026 , the outstanding balance of short-term loans was $ 63.8 million, with interest rates ranging from 2.0 % to 3.8 %.

Of this amount, $ 45.2 million was unsecured, $ 10.7 million was secured by the time deposit of the Company, and $ 7.9 million was secured by real estate properties owned by certain subsidiaries.

As of December 31, 2025 , the outstanding balance of short-term loans was $ 58.6 million, with interest rates ranging from 2.2 % to 3.9 %.

Of this amount, $ 43.0 million was unsecured, $ 7.4 million was secured by the time deposit of the Company, and $ 8.2 million was secured by real estate properties owned by certain subsidiaries.

Time deposit pledged as collateral is classified as restricted cash and presented separately in the condensed consolidated balance sheets.

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.

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

The credit facility bears interest at a rate of 6.5 % per annum on the amount drawn from the line of credit.

The credit facility is collateralized by the real estate properties owned by ChaoYang Tongmei.

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

The credit facility is collateralized by the real estate properties owned by the subsidiary.

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

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

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.

According to the agreement, ChaoYang XinMei temporarily transferred ownership of its production line and related equipment to the financing company, while retaining the right to use the property for production.

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 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 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):

As of March 31, 2026 , $ 4.4 million is included in “Other long-term liabilities” and $ 0.9 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In December 2023 and February 2026, two of our consolidated subsidiaries entered into financing arrangements with unrelated financing companies, receiving proceeds of approximately $ 2.1 million and $ 2.9 million, respectively.

According to the agreements, the subsidiaries temporarily transferred ownership of its production lines and related equipment to the financing companies, while retaining the right to use the properties in their operations.

The arrangements have terms of 30 months and 36 months, respectively, and provide the subsidiaries with options to repurchase the production lines and related equipment at the end of the respective terms for nominal consideration of approximately $ 14.00 per arrangement.

As of March 31, 2026 , $ 1.9 million is included in “Other long-term liabilities” and $ 1.3 million is included in “Short-term loans” in our condensed consolidated balance sheets.

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

As of March 31, 2026 , the full amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In September and November 2025, one of our consolidated subsidiaries 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 one of our consolidated subsidiaries.

As of March 31, 2026 , $ 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 March 31, 2026 , the maturities of our long-term loan liabilities in five years (including current portion) are as follows (in thousands):

Maturity of long-term loans

2026 (remaining 9 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 .

In summary, short-term loans of $ 68.9 million included under “Short-term loans” in our condensed consolidated balance sheet at March 31, 2026 , consisted of $ 63.8 million of short-term bank loans and $ 5.1 million of the current portion of long-term debt.

Long-term loan of $ 6.8 million included under “Other long-term liabilities” in our condensed consolidated balance sheet at March 31, 2026 .

These borrowings are subject to customary lending arrangements.

As of March 31, 2026 , the Company was in compliance with all applicable covenants.

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

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

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

As of March 31, 2026 , the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands):

Maturity of Lease Liabilities

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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)

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

Nine Months Ended

September 30,

Three Months Ended

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

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Three Months Ended

Nine Months Ended

September 30,

Operating lease

$ 161 $ 153 $ 482 $ 459

Short-term lease expense

31 46 114 129

$ 192 $ 199 $ 596 $ 588

Redeemable Noncontrolling Interests

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public company.

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):

The components of the change in redeemable noncontrolling interests for the three months ended March 31, 2026 are presented in the following table (in thousands):

Balance as of January 1, 2026

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Effect of foreign currency translation attributable to redeemable noncontrolling interests

Balance as of September 30, 2025

Balance as of March 31, 2026

Recent Accounting Pronouncements

In December 2023, 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.

Furthermore, the update improves to assess income tax information that affects cash flow forecasts and capital allocation decisions.

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 condensed consolidated financial statements.

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

The update adds an illustrative example aimed at clarifying the scope application of a profit interest award in accordance with Topic 718.

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

Adoption of the new standard had an immaterial effect on our condensed 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.

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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 ):

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.

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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.

Subsequent Events

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.

On April 21, 2026, AXT entered into an underwriting agreement (the “Underwriting Agreement”) with Northland Securities, Inc., as representative of the underwriters named therein (the “Underwriters”) related to the offer and sale of 8,560,311 shares of Common Stock at a price to the public of $ 64.25 per share.

Pursuant to the Underwriting Agreement, AXT also granted the Underwriters a 30 -day option to purchase up to 1,284,046 additional shares of common stock which was exercised in full by the Underwriters on April 22, 2026.

AXT received total gross proceeds of approximately $ 632.5 million, before deducting the underwriting discounts and commissions and other offering expenses.

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

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and its consolidated subsidiaries) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Statements relating to our expectations regarding results of operations, market and customer demand for our products, customer qualifications of our products, our ability to expand our markets or increase sales, emerging applications using chips or devices fabricated on our substrates, including the use of InP wafer substrates in artificial intelligence (“AI”) applications, the development and adoption of new products, applications, enhancements or technologies, the life cycles of our products and applications, product yields and gross margins, expense levels, the impact of the adoption of certain accounting pronouncements, our investments in capital projects, ramping production at our new sites, potential severance costs with respect to any reduction in our work force, our ability to have new customers qualify substrates from our new manufacturing locations in China, our ability to utilize or increase our manufacturing capacity, and our belief that we have adequate cash and investments to meet our needs over the next 12 months are forward-looking statements.

Statements relating to our expectations regarding the receipt of export permits for our indium phosphide substrates, results of operations, market and customer demand for our products, our ability to expand our markets or increase sales, emerging applications using chips or devices fabricated on our substrates, including the use of InP wafer substrates in artificial intelligence (“AI”) applications, the development and adoption of new products, applications, enhancements or technologies, the life cycles of our products and applications, product yields and gross margins, expense levels, the impact of the adoption of certain accounting pronouncements, our investments in capital projects, ramping production at our new sites, potential severance costs with respect to any reduction in our work force, our ability to have new customers qualify substrates from our new manufacturing locations in China, our ability to utilize or increase our manufacturing capacity, to enable our industry to meet future demands and needs for our indium phosphide wafer substrates, and our belief that we have adequate cash and investments to meet our needs over the next 12 months are forward-looking statements.

Additionally, statements regarding completing steps in connection with the proposed listing of shares of our wafer manufacturing company, Beijing Tongmei Xtal Technology Co., Ltd.

(“Tongmei”), on the Shanghai Stock Exchange’s Sci-Tech innovAtion boaRd (the “STAR Market”), being accepted to list shares of Tongmei on the STAR Market, the timing and completion of such listing of shares of Tongmei on the STAR Market are forward-looking statements.

Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “goals,” “should,” “continues,” “would,” “could” and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this Quarterly Report on Form 10-Q.

The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “could,” “would,” “project,” “plan,” “potentially,” “likely,” and similar expressions and variations thereof are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements in this Quarterly Report on Form 10-Q, and include statements regarding the intent, belief or current expectations of our management that are subject to known and unknown risks, uncertainties and assumptions which could cause actual results to differ materially from those expressed or implied in the forward-looking statement.

Additionally, statements concerning future matters such as our strategy and plans, industry trends and the impact of trends, tariffs and trade wars, geopolitical tensions, export restrictions in China, results of operations and financial condition, mandatory factory shutdowns in China, changes in policies and regulations in China and economic cycles on our business are forward-looking statements.

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These uncertainties and factors include, but are not limited to:

the withdrawal, cancellations or requests for redemptions by private equity funds in China of their investments in Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States.

the receipt of export permits to export indium phosphide wafers from China, as well as our other wafer products, and the timing of such export permit approvals, the withdrawal, cancellations or requests for redemptions by private equity funds in China of their investments in Tongmei, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and the listing of shares of Tongmei on the STAR Market, continued open access to companies to list shares on the STAR Market, investor enthusiasm for new listings of shares on the STAR Market and geopolitical tensions between China and the United States.

Additional uncertainties and factors include, but are not limited to:

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This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”) and the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

AXT is a worldwide materials science company that develops and produces high-performance compound and single element semiconductor substrates, also known as wafers.

AXT is a worldwide materials science company that develops and produces high-performance compound and single element semiconductor substrate wafers and certain raw materials integral to these substrates.

Two of our consolidated subsidiaries produce and sell certain raw materials some of which are used in our substrate manufacturing process and some of which are sold to other companies.

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However, certain chips may become too hot or perform their function too slowly if silicon is used as the base material.

In addition, optoelectronic applications, such as LED lighting and chip-based lasers, do not use silicon substrates because they require a wave form frequency that cannot be achieved using silicon.

In addition, optoelectronic applications, such as LED lighting and chip-based lasers, do not use silicon substrates because they require a waveform frequency that cannot be achieved using silicon.

Alternative or specialty materials are used to replace silicon as the preferred base in these situations.

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Data centers use InP devices for high-speed optical data transmission.

We believe the growth of AI applications will increase the need for high-speed data transfer, which may lead to an increase in InP substrate demand from such data centers.

We believe the growth of AI applications is increasing the need for high-speed data transfer, which may enable a growing increase in InP substrate demand for such data centers.

Currently, InP substrates are being used in certain consumer products, including proximity sensors and other sensors in mobile devices, biometric wearables and other health monitoring applications.

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Semi-conducting GaAs substrates are also used in making industrial lasers.

GaAs wafers could also be used for making vertical cavity surface emitting lasers (VCSELs) for facial recognition and micro-LEDs targeting improved screen technology.

GaAs wafers could also be used for making vertical cavity surface emitting lasers (VCSELs) for facial recognition.

Ge substrates are used in applications such as solar cells for space and terrestrial photovoltaic applications.

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In the event of industry-wide supply shortages we believe our vertically integrated supply chain strategy will be even more advantageous.

Our raw material companies produce materials, including raw gallium (4N Ga), high purity gallium (6N and 7N Ga), starting material for InP, arsenic, germanium, germanium dioxide, pyrolytic boron nitride (pBN) crucibles and boron oxide (B2O3).

One company does recycling of our scrap materials.

We have board representation in all of these raw material companies.

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For reasons of manufacturing efficiency, we elected to also move part of our germanium manufacturing line.

Our indium phosphide manufacturing line, as well as various administrative and sales functions, remain primarily at our original site.

Our indium phosphide manufacturing line, as well as various administrative and sales functions, remain primarily at our original site in Beijing.

Begun in 2017, the relocation of our gallium arsenide production lines is now completed.

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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 September 30, 2025:

The following organization chart depicts the consolidated structure as of March 31, 2026:

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.

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On March 4, 2025, the United States further increased the tariff on imports of many products, including our wafer substrates, to 70%.

In the first half of April 2025, we observed high volatility in tariffs put in place by the United States.

At least four separate tariffs were imposed by the United States on products from China.

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.

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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.

As such, in 2025, only approximately 2% of our revenue was generated by sales to customers in North America.

On February 20, 2026, the U.S.

Supreme Court invalidated many of the global tariffs previously imposed under the International Emergency Economic Powers Act of 1977 (the "IEEPA") and the U.S.

Customs and Border Protection subsequently announced that IEEPA-based tariff provisions would be terminated effective February 24, 2026.

However, tariffs imposed under other authorities, including Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974, remain in effect, and the U.S.

government has indicted that it may pursue additional or replacement tariffs under alternative legal authorities, including temporary measures under Section 122 of the Trade Act of 1974.

If maintained, these announced new tariffs, as well as related measures that could be taken by other countries and the potential escalation of trade disputes, could affect our business and results of operations.

We continue to monitor developments closely, including pending legal challenges to certain tariff authorities, updated guidance from regulators, retaliatory measures, resolution of trade agreements and ongoing negotiations with additional trade partners.

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

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As a result, the three wafer substrate product families manufactured by Tongmei all require permits from China’s Ministry of Commerce before they can be exported from China.

InP export permits represent the most significant challenge we currently face.

The portal to apply for exports of indium phosphide from China opened in March 2025 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 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.

On June 11, 2025, Tongmei was informed that it had 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.

While we continue to receive permits, we have a backlog of orders for which we have not yet received permits and as of the date of this report we still cannot predict when a permit application will be reviewed and approved.

The fluidity of the export permit requirements and ongoing lack of surety creates anxiety for us and for our customers.

To our knowledge, indium phosphide is rarely used in military applications and we can reasonably expect that export permits to ship our indium phosphide substrates to the U.S.

will be granted.

However, the timing for receiving permits remains uncertain.

However, the timing for receiving permits remains uncertain, unclear and beyond our control.

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

Obtaining export permits on a timely basis may result in a mismatch between our receipt of purchase orders for indium phosphide substrates and the recognition of revenue under U.S.

GAAP and this may have a material adverse effect on our business, financial condition, and results of operations.

On December 27, 2025, the Standing Committee of the National People’s Congress of China (“NPC”) enacted substantial revisions to the Foreign Trade Law of the People’s Republic of China, effective March 1, 2026 (the “Foreign Trade Law”).

The revisions to the Foreign Trade Law provide, among other things, enhanced power vested in governmental agencies to prohibit or restrict the import or export of goods and technologies for a variety of reasons set forth in Article 18 of the Foreign Trade Law, including, but not limited to, (i) safeguarding national security, (ii) where there is a domestic shortage of supply or to protect potentially depleted natural resources, (iii) in order to establish or accelerate the establishment of specific domestic industries, and (iv) other circumstances where it is necessary to prohibit or restrict the import or export of relevant goods or technologies, or take other necessary measures.

The revisions also include a chapter on intellectual property introducing new trade sanctions for the infringement of intellectual property rights when such infringement endangers the order of foreign trade and targets specific licensing practices that prohibit the challenge of a license’s validity or portfolio licensing bundling.

The specific prohibitions and restrictions on the import and export of goods and technologies are delegated to the Ministry of Commerce of the People’s Republic of China, among other agencies.

We do not believe that the revisions will have any additional material adverse effects on our wafer substrate products beyond the current restrictions and licensing requirements.

However, with the Foreign Trade Law’s enhanced power over import and export prohibitions and restrictions, no assurances can be given that additional restrictions will not be imposed in the future.

In the ordinary course of business, our PRC subsidiaries and PRC joint ventures require permits and licenses to operate in the PRC.

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The new list added gallium arsenide.

As a result of the newly published list, we were required to seek additional permits.

In the ordinary course of business, our PRC subsidiaries and PRC joint ventures apply for permits as required.

Another example of a change in the rules and regulations in China occurred in 2015 when we were instructed by the Beijing municipal government to relocate part of our manufacturing facility in Beijing.

Any such intervention or influence or change in the rules and regulations in China could result in a material change in our PRC operations and/or the value of our common stock or cause the value of such securities to significantly decline or be worthless.

Another example of a change in the rules and regulations in China occurred when we were instructed by the Beijing municipal government to relocate part of our manufacturing facility in Beijing.

We have created a vertically integrated supply chain and transfer cash through our corporate structure in three ways.

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

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 three months ended March 31, 2026, 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 wer e $0 mil lion.

For the year ended December 31, 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 approximately $0.9 million.

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

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.

For the three months ended March 31, 2026 and the year ended December 31, 2025, 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.

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Joint venture raw material companies in China bring certain risks.

Risks exist in utilizing our new gallium arsenide manufacturing sites efficiently.

The Chinese central government is increasingly aware of air pollution and other forms of environmental pollution and their reform efforts can impact our manufacturing, including intermittent mandatory shutdowns.

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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 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.

As of March 31, 2026 and December 31, 2025, our accounts receivable, net balance w as $32.0 million and $26.8 million, respectively, which was net of an allowance of $164,000 and $164,000, 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.

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Warranty costs are accrued at the time revenue is recognized.

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

As of March 31, 2026 and December 31, 2025, accrued product warranties total ed $439,000 a nd $411,000, 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.

If ac tual 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.

Inventory Valuation

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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 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.

As of March 31, 2026 and December 31, 2025, we had an inventory reserve of $29.8 milli on and $28.4 million, respectively, for excess and obsolete inventory a nd $71,000 and $180,000, 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.

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We also invest in equity instruments of privately-held companies in China for business and strategic purposes.

Investments in our unconsolidated PRC joint venture companies are classified as other assets and accounted for under either the equity or fair value method, depending on whether we have the ability to exercise significant influence over the joint venture company’s operations or financial decisions.

Investments in our unconsolidated PRC joint venture companies are classified as other assets and accounted for under the equity method.

We monitor our investments for impairment and record reductions in carrying value when events or changes in circumstances indicate that the carrying value may not be recoverable.

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.

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

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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 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.

As of March 31, 2026, 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 months ended March 31, 2026 and 2025.

Impairment of Long-Lived Assets

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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 September 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 March 31, 2026 and December 31, 2025.

Stock-based Compensation

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On December 3, 2024, China issued further rules restricting exports of materials that can typically be used in military applications including antimony, gallium, germanium and other superhard materials.

The effective date was December 3, 2024, the same day as the announcement itself.

Reciprocally, the United States increased tariffs on many items from China from 25% to 50%, effective January 1, 2025.

On February 1, 2025, the United States again increased the tariff on imports of many products from China, including our wafer substrates, to 60%.

On February 1, 2025, the United States again further increased the tariff on imports of many products from China, including our wafer substrates, to 60%.

On February 4, 2025, China added indium phosphide substrates to its export control list.

On March 4, 2025, the United States further increased the tariff on imports of many products, including our wafer substrates, to 70%.

On April 2, 2025, the United States again announced a baseline 10% tariff on product imports from almost all countries and individualized higher tariffs on certain other countries, including up to 145% tariffs on certain products from China.

Several tariff announcements have been followed by announcements of limited exemptions and temporary pauses;

however, our wafer substrates continue to be subject to tariffs of approximately 100%.

Due to the uncertainties pertaining to export restrictions in China and tariffs and tariff levels in the United States, it is difficult for us to reliably forecast the short-term or ongoing impact to our business or that of our customers but is expected that tariffs and export regulations would negatively impact our revenues, profitability and cash flows.

We are closely monitoring the fluid nature of proposed tariffs and any impact they may have on our operations and will continue to monitor macroeconomic conditions and evaluate the financial and operational impact of ongoing trade policy shifts.

InP export permits represent the most significant challenge we currently face.

On February 20, 2026, the U.S.

Supreme Court invalidated many of the global tariffs previously imposed under the International Emergency Economic Powers Act of 1977;

however, tariffs imposed under other authorities remain in effect, and the U.S.

government has indicted that it may pursue additional or replacement tariffs under alternative legal authorities, including temporary measures under Section 122 of the Trade Act of 1974.

Due to the uncertainties pertaining to export restrictions in China and tariffs and tariff levels in the United States, it is difficult for us to reliably forecast the short-term or ongoing impact to our business or that of our customers but is expected that tariffs and export regulations will negatively impact our revenues, profitability and cash flows.

We are closely monitoring the fluid nature of both export permits and their impact on our operations.

More broadly, we will continue to monitor the macroeconomic conditions and evaluate the financial and operational impact of ongoing trade policies.

Previously, as of August 1, 2023, Tongmei was required to secure permits from the applicable Chinese authorities to export gallium arsenide and germanium substrates.

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The portal to apply for exports of indium phosphide from China opened in March 2025 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.

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

On June 11, Tongmei was informed that it had 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 December 27, 2025 China’s National People’s Congress enacted substantial revisions to the Foreign Trade Law of the People’s Republic of China, effective March 1, 2026 (the “Foreign Trade Law”).

The specific prohibitions and restrictions on the import and export of goods and technologies are delegated to the Ministry of Commerce of the People’s Republic of China, among other agencies.

We do not believe that the revisions will have any additional material adverse effects on our wafer substrate products beyond the current restrictions and licensing requirement.

However, with the Foreign Trade Law’s enhanced power over import and export prohibitions and restrictions, no assurances can be given that additional restrictions will not be imposed in the future.

The fluidity of the export permit requirements and ongoing lack of surety creates anxiety for us and for our customers.

To our knowledge, indium phosphide is rarely used in military applications and we can reasonably expect that export permits to ship our indium phosphide substrates to the U.S.

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.

However, the timing for when permits will be granted remains uncertain, unclear and beyond our control.

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.

14 unchanged sentences

On July 14, 2025, we notified The Nasdaq Stock Market LLC (“Nasdaq”) that due to the passing of Ms.

Russell, our Audit Committee has been reduced to two independent directors, and we are currently not compliant with Nasdaq Lising Rule 5605(c)(2)(A), which requires the Audit Committee to be comprised of a minimum of three independent directors.

On July 18, 2025, Nasdaq confirmed our non-compliance and further notified us that, consistent with Nasdaq Listing Rule 5605(c)(4), Nasdaq will provide us a cure period to regain compliance (i) until the earlier of the Company’s next annual meeting of shareholders or July 11, 2026;

or, (ii) if the next annual meeting of shareholders is held before January 7, 2026, then we must provide evidence of compliance no later than January 7, 2026.

We intend to regain compliance as soon as possible and the Board will add a new independent director who satisfies the applicable requirements of the Nasdaq Listing Rules prior to the expiration of the foregoing cure period.

On July 29, 2025, we appointed Leonard J.

Leblanc to the Board of Directors (the “Board”) to fill the vacancy on the Board due to the passing of Ms.

Leblanc will serve as a Class III director with a maximum term expiring on July 29, 2027, or until his successor is duly elected and qualified.

In connection with Mr.

Leblanc’s appointment to the Board, the Board considered the compensation Mr.

Leblanc previously received during his term as director emeritus, and determined that Mr.

Leblanc is not independent under the Nasdaq Listing Rules as his total compensation exceeded $120,000 during January 1, 2022 to December 31, 2022.

From January 1, 2023 to December 31, 2023, Mr.

Leblanc’s total compensation did not exceed $120,00 and Mr.

Leblanc did not receive any further compensation from us after December 29, 2023.

As such, after December 31, 2022, Mr.

Leblanc would not have received any compensation from us in excess of $120,000 during any period of twelve consecutive months in the three year look-back period preceding January 1, 2026, and he would therefore be considered independent under the Nasdaq Listing Rules on January 1, 2026.

Other than the compensation previously received as director emeritus, the Board has determined that Mr.

Leblanc meets all independence requirements for a member of the audit committee under Rule 10A-3 of the Securities and Exchange Act of 1934, as amended, and the other independence requirements under the Nasdaq Listing Rules.

The Board also considered Mr.

Leblanc’s previous service as a director and chair of the Audit Committee.

Leblanc’s experience and previous service with us, the Board determined that Mr.

Leblanc familiarity with our operations, business, supply-chain and manufacturing strategies, and intricacies of our corporate structure is necessary to our current needs.

The Board believes that the unforeseen passing of Ms.

Russell during a critical period in our operations further necessitates the appointment of a director who is already familiar with our financial operations and our management under the current environment and economic conditions.

Accordingly, the Board determined that the appointment of Mr.

Leblanc to our Audit Committee as a non-independent director will be in the best interests of the Company and our stockholders in reliance on the exception provided under applicable Nasdaq Listing Rules for membership on the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee under exceptional and limited circumstances.

Based on the foregoing determination, 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.

LeBlanc’s independence under the Nasdaq Listing Rules will be re-evaluated by the Board on or after January 1, 2026.

Russell, our Audit Committee had been reduced to two independent directors, and we were not compliant with Nasdaq Listing Rule 5605(c)(2)(A), which requires the Audit Committee to be comprised of a minimum of three independent directors, and our non-compliance was confirmed by Nasdaq on July 18, 2025.

On July 29, 2025, we appointed Mr.

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

Chen currently serves as an independent director, lead director, Chair of the Nominating and Governance Committee, and a member of the Audit Committee and Compensation Committee.

LeBlanc as a non-independent member of its Board in reliance on the limited exception provided under the Nasdaq Listing Rules.

On January 26, 2026, the Board re-evaluated Mr.

LeBlanc’s independence under the Nasdaq Listing Rules, and determined that Mr.

LeBlanc is now independent under the Nasdaq Listing Rules.

The Board previously determined that Mr.

LeBlanc met all independence requirements for a member of the audit committee under Rule 10A-3 of the Securities and Exchange Act of 1934, as amended, and the other independence requirements under the Nasdaq Listing Rules.

Upon the Board’s determination that Mr.

LeBlanc is now independent under the Nasdaq Listing Rules, the Company’s Audit Committee will consist of three independent directors as required by Nasdaq Listing Rule 5605(c)(2)(A).

On January 30, 2026, we received notification from the Nasdaq Listing Qualifications Department that we have regained compliance with Nasdaq Listing Rule 5605(c)(2).

Effective upon Mr.

LeBlanc’s determination as an independent director by the Board, Mr.

Chen stepped down as Chair of the Audit Committee and the Board appointed Mr.

LeBlanc as Chair of the Audit Committee.

Chen will remain a member of the Audit Committee.

The Board has determined that Mr.

LeBlanc is an “audit committee financial expert” as defined by the rules and regulations of the SEC.

Recent Financing

On April 21, 2026, we entered into an underwriting agreement (the “Underwriting Agreement”) with Northland Securities, Inc., as representative of the underwriters named therein (the “Underwriters”) related to the offer and sale of shares of the Company’s common stock (the “Offering”).

The Underwriting Agreement provides for the offer and sale by the Company, and the purchase by the Underwriters, of 8,560,311 shares of the Company’s common stock (the “Base Shares”) at a price to the public of $64.25 per share.

Pursuant to the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 1,284,046 additional shares of common stock at the public offering price, which was exercised in full on April 22, 2026.

The Company received total gross proceeds of approximately $632.5 million, before deducting the underwriting discounts and commissions and other offering expenses.

Results of Operations

Three Months Ended

Nine Months Ended

September 30,

Product Type:

($ in thousands)

Raw materials and other

Total revenue

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.

Re venue increased $7.6 million, or 39.1%, to $26.9 milli on for the three months ended March 31, 2026 from $19.4 million for the three months ended March 31, 2025 .

The substrate revenue increase for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily the result 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 s ales decreased $0.6 million, or 7.6%, to $7.6 million for the three months ended March 31, 2026 as compared to the same period in 2025.

The dec rease in ra w materials revenue for the three months ended March 31, 2026 as compared to the same period in 2025 was primarily the result of a decrease in sales of refined gallium resulting from weaker market demand, partially offset by increased sales of pBN crucibles resulting from stronger market demand.

Revenue by Geographic Region

Three Months Ended

September 30,

($ in thousands)

9 unchanged sentences

Total revenue

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)

% of total revenue

Asia Pacific (excluding China, Taiwan and Japan)

% of total revenue

Europe (primarily Germany)

% of total revenue

North America (primarily the United States)

% of total revenue

Total revenue

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 $4.0 million, pri marily due to additional export approvals granted by the China government .

Revenue in China increased $3.1 million for the three months ended March 31, 2026 , primarily due to higher demand for our InP wafer substrates and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by lower demand for our GaAs and Ge wafer substrates and refined gallium sold by one of our consolidated subsidiaries.

R evenue in Taiwan decrea sed $0.5 million, primarily due to reduced export approvals granted by the China government.

Revenue in Japan increased $0.8 million, primarily due to additional export approvals granted by the China government for our GaAs and InP wafer substrates.

Revenue in Asia Pac ific increased $1.4 million, primarily due to higher demand for our InP wafer substrates, partially offset by lower demand for our GaAs wafer substrates.

R evenue in Euro pe increased $3.6 million, primarily due to additional export approvals granted by the China government.

Revenue in North America decreased $0.9 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

Nine Months Ended

September 30,

($ in thousands)

Gross profit (loss)

Gross Profit %

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.

These charges resulted in a negative 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.

Gro ss profit increased 9.2 million, or 742.9%, to a profit of $8.0 m illion for the three months ended March 31, 2026 from a loss of $1.2 million for the three months ended March 31, 2025.

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

Selling, General and Administrative Expenses

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Selling, general and administrative expenses

% of total revenue

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.

Selling, general and administrative expe nses increased $635,000, or 10.7%, to $6.6 mi llion for the three months ended March 31, 2026 from $5.9 million for the three months ended March 31, 2025.

T he higher selling, general and administrative expenses were primarily from an increase in compensation related costs, travel related costs and legal expenses, partially offset by a decrease in license, tax and registration fees.

Research and Development

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Research and development

% of total revenue

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 .

Research and development exp enses decreased $0.1 million, or 3.4%, to $3.0 million fo r the three months ended March 31, 2026 from $3.1 million for the three months ended March 31, 2025.

Th e decrease in r esearch and development expenses for the three months ended March 31, 2026 was primarily d ue to a decrease in compensation related costs, partially offset by the increased use of certain materials for new product development.

Interest Expense, Net

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Interest expense, net

Interest income (expense), net

% of total revenue

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

Interest income (expense) , net increased $370,000, or 137.5%, to an income of $101,000 for t he three months ended March 31, 2026 from an expense of $269,000 for the three months ended March 31, 2025.

The increase was primarily due to higher interest income resulting from proceeds from our secondary public offering in the gross amount of $100 million in December 2025 .

Equity in Income of Unconsolidated Joint Venture Companies

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Gain from equity method and fair value investments

Equity in income of unconsolidated joint ventures

% of total revenue

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 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.

The equity in income of unconsolidated joint ventures companies was income o f $0.4 milli on for the three months ended March 31, 2026 as compared to income of $0.2 million for the three months ended March 31, 2025.

T he increase in income of $0.1 m illion is primarily due t o stronger performance in unconsolidated joint ventures.

Other Income, Net

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Other income (loss), net

Other income, net

% of total revenue

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 $1.8 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.

Other incom e, net decreased $0.3 million, or 78.5%, to $76,000 for the th ree months ended March 31, 2026 from $0.4 million for the three months ended March 31, 2025.

Other income, n et decreased primarily due to foreign currency exc hange losses in the current period compared to foreign currency exchange gains in the prior period.

Provision for Income Taxes

Three Months Ended

Nine Months Ended

September 30,

($ in thousands)

Provision for income taxes

% of total revenue

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.

operations as most of the income in the U.S.

has been fully offset by utilization of net operating loss carryforwards.

Provision for incom e taxes increased $356,000, or 481.1%, t o $430,000 for the three months ended March 31, 2026 as compared to $74,000 for the three months ended March 31, 2025.

The tax expense recorded for the three months ended March 31, 2026 is the result of mainly foreign taxes, federal income taxes, and some minimum state taxes.

Additionally, there is uncertainty of generating future profit in the U.S., which has resulted in our deferred tax assets being fully reserved for the U.S.

2 unchanged sentences

and China-based operations.

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.

operations as most of the income in the U.S.

has been fully offset by utilization of net operating loss carryforwards.

Net (Income) loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

Net (income) loss attributable to

Three Months Ended

noncontrolling interests and

Nine Months Ended

noncontrolling interests and

September 30,

redeemable noncontrolling interests

September 30,

redeemable noncontrolling interests

($ in thousands)

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

% of total revenue

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.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling inte rests increased $1.4 million or 111.1% to an income of $0.1 mi llion for the three months ended March 31, 2026, from a loss of $1.2 million for the three months ended March 31, 2025, primarily due to higher profitability from our PRC subsidiaries as sales increased.

Liquidity and Capital Resources

2 unchanged sentences

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

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.

As of March 31, 2026, our principal source of liquidity w as $57.9 mil lion, which consisted of cash o f $41.8 m illion and restricted cash of $16.1 m illion.

In the three months ended March 31, 2026, cash and restricted c ash decreased by $70.5 m illion.

Th e decrease in cash and restricted cash of $70.5 million in the three months ended March 31, 2026 was primarily du e to net cash used in investing activities of $67.3 million and net cash used in operating activities of $11.7 million, partially offset by net cash provided by financing activities of $8.0 million and the effect of exchange rate changes of $0.5 million.

As of March 31, 2026, we and our PRC subsidiaries held approximatel y $32.6 mi llion in cash and investments in foreign bank accounts, of whic h $15.9 mil lion was classified in restricted cash.

As of March 31, 2025, our principal source of liquidity was $38.2 million, which consisted of cash of $31.6 million and restricted cash of $6.6 million.

In the three months ended March 31, 2025, cash and restricted cash increased by $4.4 million.

The increase in cash and restricted cash of $4.4 million in the three months ended March 31, 2025 was primarily due to net cash provided by financing activities of $6.9 million and the effect of exchange rate changes of $1.6 million, partially offset by net cash used in operating activities of $3.3 million and net cash used in investing activities of $0.8 million.

As of March 31, 2025, we and our PRC subsidiaries held approximately $31.8 million in cash and investments in foreign bank accounts, of which $6.4 million was classified in restricted cash.

Net cash used in operating activities of $11.7 milli on for the three months ended March 31, 2026 was primarily comprised of a net change of $13.4 million in operating assets and liabilities, a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $1.5 million and gain from unconsolidated joint ventures of $0.4 million, partially offset by the adjustment for non-cash items of depreciation and amortization of $2.4 million, and stock-based compensation of $1.0 million and change in deferred tax assets of $0.1 million .

Net cash used in operating activities of $3.3 million for the three months ended March 31, 2025 was primarily comprised of a net loss before income attributable to noncontrolling interest and redeemable noncontrolling interests of $10.0 million, and income from equity method investments of $0.2 million, partially offset by a net change of $4.1 million in operating assets and liabilities, the adjustment for non-cash items of depreciation and amortization of $2.2 million, and stock-based compensation of $0.6 million.

Net cash used in investing activities of $67.3 milli on for the three months ended March 31, 2026 was primarily from the purchase of available-for-sale debt securities of $65.9 million and the purchase of property, plant and equipment o f $1.4 million .

Net cash used in investing activities of $0.8 million for the three months ended March 31, 2025 was primarily from the purchase of property, plant and equipment of $0.5 million, and investment in non-marketable equity investments of $0.3 million.

Net cash provided by financing activities was $8.0 m illion for the three months ended March 31, 2026, which consisted of proceeds from short-term loan s of $20.9 million, long-term loan of $2.9 million and common stock options exercised of $1.5 million , p artially offset by repayment of short-term loans of $16.6 million and repayment of long-term loan of $0.8 m illion.

Net cash provided by financing activities was $6.9 million for the three months ended March 31, 2025, which consisted of proceeds from short-term loans of $13.7 million and long-term loan of $2.8 million, partially offset by repayment of short-term loans of $9.3 million and repayment of long-term loan of $0.3 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.

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Since 2015, no shares were repurchased under this program.

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

As of March 31, 2026, approximat ely $2.7 mi llion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

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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 September 30, 2025, the balance remained unchanged.

As of March 31, 2026, the balance remained unchanged.

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

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

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.

For the three months ended March 31, 2026 and 2025, there were no dividends paid to us, directly or to an intermediate entity within our corporate structure, by our PRC subsidiaries and PRC raw material joint ventures.

For the three months ended March 31, 2026 and 2025, there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

For the three months ended March 31, 2026, 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.

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public company.

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 September 30, 2025 and December 31, 2024 (in thousands, except interest rate data):

September 30,

Bank of China (1)

Bank of China (3)

Bank of Communications (1)

China Merchants Bank (1)

Bank of Beijing (2)

Industrial Bank (1)

Industrial Bank (4)

NingBo Bank (1)

Industrial and Commercial Bank of China (1)

China Citic Bank (1)

Agricultural Bank of China (1)

Bank of Hangzhou (1)

Industrial and Commercial Bank of China (1)

Bank of China (1)

Industrial Bank (1)

Bank of Communications (1)

China Merchants Bank (1)

NanJing Bank (1)

Collateral for the above bank loans and line of credit

Not collateralized.

AXT time deposit.

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

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

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

Our bank loans and credit facilities are primarily entered into by our subsidiaries with various PRC banks and generally have original maturities of 12 months or less.

These borrowings are classified as “Short-term loans” in our condensed consolidated balance sheets.

As of March 31, 2026, the outstanding balance of short-term loans was $63.8 million, with interest rates ranging from 2.0% to 3.8%.

Of this amount, $45.2 million was unsecured, $10.7 million was secured by the time deposit of the Company, and $7.9 million was secured by real estate properties owned by certain subsidiaries.

As of December 31, 2025, the outstanding balance of short-term loans was $58.6 million, with interest rates ranging from 2.2% to 3.9%.

Of this amount, $43.0 million was unsecured, $7.4 million was secured by the time deposit of the Company, and $8.2 million was secured by real estate properties owned by certain subsidiaries.

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

The credit facility bears interest at a rate of 6.5% per annum on the amount drawn from the line of credit.

The credit facility is collateralized by the real estate properties owned by ChaoYang Tongmei.

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

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

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.

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 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 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.

The credit facility is collateralized by the real estate properties owned by the subsidiary.

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

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

As of March 31, 2026, $4.4 million is included in “Other long-term liabilities” and $0.9 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of March 31, 2026, $1.9 million is included in “Other long-term liabilities” and $1.3 million is included in “Short-term loans” in our condensed consolidated balance sheets.

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

As of March 31, 2026, the full amount is included in “Short-term loans” in our condensed consolidated balance sheets.

In September and November 2025, one of our consolidated subsidiaries 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 one of our consolidated subsidiaries.

As of March 31, 2026, $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.

On November 7, 2025, we filed with the SEC a registration statement on Form S-3, pursuant to which we may offer up to $100 million 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, which became effective in accordance with the provisions of Section 8(a) of the Securities Act on November 27, 2025.

On December 29, 2025, we filed a prospectus supplement relating to an offering of 7,098,492 shares of our common stock at a public offering price of $12.25 per share and up to 1,064,773 shares of common stock subject to an option to purchase additional shares granted to the underwriters of the offering at the public offering price (the “December Offering”).

The closing of the December Offering occurred on December 30, 2025, including the full exercise of the underwriters’ option.

Net proceeds from the December Offering, after deducting underwriting discounts, commissions, and other offering costs, were $93.9 million.

On April 20, 2026, we filed with the SEC an automatic registration statement on Form S-3, pursuant to which we may offer common stock, warrants and/or units in one or more offerings and in any combination, which became effective upon filing on April 20, 2026 pursuant to Rule 462(e) of the Securities Act.

On April 21, 2026, filed a prospectus supplement relating to an offering of 8,560,311 shares of our common stock at a public offering price of $64.25 per share and up to 1,284,046 shares of common stock subject to a 30-day option to purchase additional shares granted to the underwriters of the offering at the public offering price (the “April Offering”).

The closing of the April Offering occurred on April 22, 2026.

On April 22, 2026, the Underwriters exercised the option in full.

Net proceeds from the offering, after deducting underwriting discounts, commissions, and other offering costs, were $600.2 million.

We intend to use the net proceeds from the December Offering and April Offering to financially support our subsidiary Tongmei in its efforts to increase its manufacturing capacity to produce indium phosphide substrates for export worldwide, for research and development of new or improved products, for working capital and for general corporate purposes.

Pending these uses, we intend to invest the net proceeds in a variety of capital preservation instruments, including certificates of deposit, or guaranteed obligations of the U.S.

government or other instruments that are not considered “investment securities” under the Investment Company Act of 1940, as amended.

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

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Off-Balance Sheet Arrangements

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).

As of March 31, 2026, 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