What changed in this filing

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Item 1. Financial Statements

2026-08-13 compared with 2026-05-14 · 483 added, 258 removed, 1229 unchanged (38% of the section changed)

7 unchanged sentences

Short-term investments

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

Accounts receivable, net of allowances for credit losses of $ 230 and $ 164 as of June 30, 2026 and December 31, 2025

36,675 26,849

3 unchanged sentences

598,803 246,556

Long-term investments

Property, plant and equipment, net

23 unchanged sentences

2,000 shares authorized;

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)

883 shares issued and outstanding as of June 30, 2026 and December 31, 2025 (Liquidation preference of $ 8,317 and $ 8,229 as of June 30, 2026 and December 31, 2025)

Common stock, $ 0.001 par value;

70,000 shares authorized;

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

120,000 and 70,000 shares authorized as of June 30, 2026 and December 31, 2025;

65,570 and 55,337 shares issued and outstanding as of June 30, 2026 and December 31, 2025

Additional paid-in capital

17 unchanged sentences

Three Months Ended

Six Months Ended

$ 47,589 $ 17,974 $ 74,513 $ 37,330

Cost of revenue

Gross profit (loss)

26,223 16,541 45,169 37,138

21,366 1,433 29,344 192

Operating expenses:

Selling, general and administrative

7,292 5,653 13,843 11,569

Research and development

3,651 2,525 6,663 5,643

Total operating expenses

Loss from operations

10,943 8,178 20,506 17,212

Income (loss) from operations

10,423 ( 6,745 ) 8,838 ( 17,020 )

Interest income (expense), net

Equity in income of unconsolidated joint ventures

Other income, net

Loss before provision for income taxes

4,728 ( 202 ) 4,829 ( 471 )

Equity in income (loss) of unconsolidated joint ventures

417 ( 171 ) 770 77

Other income (expense), net

( 436 ) 23 ( 360 ) 377

Income (loss) before provision for income taxes

15,132 ( 7,095 ) 14,077 ( 17,037 )

Provision for income taxes

2,102 579 2,532 653

Net income (loss)

13,030 ( 7,674 ) 11,545 ( 17,690 )

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

Net loss attributable to AXT, Inc.

( 1,902 ) 666 ( 2,037 ) 1,884

Net income (loss) attributable to AXT, Inc.

$ 11,128 $ ( 7,008 ) $ 9,508 $ ( 15,806 )

Net income (loss) attributable to AXT, Inc.

per common share:

$ 0.18 $ ( 0.16 ) $ 0.16 $ ( 0.36 )

$ 0.17 $ ( 0.16 ) $ 0.16 $ ( 0.36 )

Weighted-average number of common shares outstanding:

61,227 43,710 57,274 43,630

63,474 43,710 59,642 43,630

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

Three Months Ended

Six Months Ended

Net income (loss)

$ 13,030 $ ( 7,674 ) $ 11,545 $ ( 17,690 )

Other comprehensive income, net of tax:

Change in foreign currency translation income, net of tax

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

1,667 1,312 3,114 1,849

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

( 1,387 ) — ( 1,856 ) —

Total other comprehensive income, net of tax

Comprehensive loss

280 1,312 1,258 1,849

Comprehensive income (loss)

13,310 ( 6,362 ) 12,803 ( 15,841 )

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

Comprehensive loss attributable to AXT, Inc.

( 2,243 ) 410 ( 2,665 ) 1,522

Comprehensive income (loss) attributable to AXT, Inc.

$ 11,067 $ ( 5,952 ) $ 10,138 $ ( 14,319 )

See accompanying notes to condensed consolidated financial statements.

1 unchanged sentence

(Unaudited, in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net income (loss)

$ 11,545 $ ( 17,690 )

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

3 unchanged sentences

Gain on disposal of equipment

Return of equity method investments as dividends

Equity in income of unconsolidated joint ventures

( 770 ) ( 77 )

Deferred tax assets

1 unchanged sentence

Accounts receivable

( 9,199 ) 3,185

( 12,170 ) 6,219

Prepaid expenses and other current assets

( 10,039 ) 5,334

( 609 ) ( 2,941 )

Accounts payable

1,053 ( 1,290 )

Accrued liabilities

11,910 ( 2,265 )

Other long-term liabilities

( 1,443 ) ( 4,982 )

Net cash used in operating activities

( 900 ) ( 7,922 )

Cash flows from investing activities:

Purchases of property, plant and equipment

( 8,598 ) ( 789 )

Purchases of available-for-sale debt securities

( 305,565 ) —

Investments in non-marketable equity investments

Net cash used in investing activities

( 314,163 ) ( 1,626 )

Cash flows from financing activities:

Proceeds from common stock options exercised

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

Proceeds from short-term bank loans

44,380 24,420

Payments on short-term bank loans

( 25,884 ) ( 20,158 )

Proceeds from long-term loans

Payments on long-term loans

( 4,175 ) ( 456 )

Net cash provided by financing activities

629,351 6,561

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

Net decrease in cash, restricted cash and cash equivalents

Net increase in cash, restricted cash and cash equivalents

316,851 1,296

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

128,366 33,811

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

$ 445,217 $ 35,107

Supplemental disclosure of non-cash flow information:

Notes receivables paid to purchase fixed assets

$ 6,401 $ 1,510

Long-term loan received in the form of a note receivable

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

12 unchanged sentences

Actual results could differ materially from those estimates.

The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected in the future or for the full fiscal year.

The results of operations for the three and six months ended June 30, 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 March 31, 2026 and December 31, 2025 , we have three companies accounted for by the equity method.

As of June 30, 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.

2 unchanged sentences

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

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

March 31, 2026

As of June 30, 2026 and December 31, 2025 , our cash, restricted cash, cash equivalents and debt investments are classified as follows (in thousands):

June 30, 2026

December 31, 2025

7 unchanged sentences

57,901 58 ( 521 ) 57,438 — — — —

Corporate equity securities

Treasury and agency securities

239,706 — ( 1,359 ) 238,347 — — — —

Total investments

305,487 58 ( 1,914 ) 303,631 — — — —

Total cash, restricted cash, cash equivalents and investments

8 unchanged sentences

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.

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):

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

We manage our debt investments as a portfolio of highly marketable securities available to support our liquidity and capital needs.

Although long-term investments may be sold before maturity, as of June 30, 2026 , we did not intend to sell those investments within the next twelve months.

The following table summarizes the fair value and gross unrealized losses of available-for-sale debt securities, aggregated by investment category and length of time in a continuous unrealize d loss p osition, as of June 30, 2026 (in thousands):

In Loss Position

Less than 12 months

12 months or Greater

Loss Position

As of March 31, 2026

As of June 30, 2026

Certificates of deposit

$ 7,846 $ ( 34 ) $ — $ — $ 7,846 $ ( 34 )

Treasury and agency securities

238,347 ( 1,359 ) — — 238,347 ( 1,359 )

Corporate bonds

2 unchanged sentences

$ 298,227 $ ( 1,914 ) $ — $ — $ 298,227 $ ( 1,914 )

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

As of June 30, 2026 , we determined that the unrealized losses were attributable to changes in market interest rates rather than credit deterioration;

accordingly, no allowance for credit losses was recorded.

Restricted Cash

1 unchanged sentence

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

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.

As of June 30, 2026 and December 31, 2025 , $ 33.1 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.

1 unchanged sentence

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

The investment balances for the non-consolidated companies are accounted for under the equity method, included in “Other assets” in the condensed consolidated balance sheets, totaled $ 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 .

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 $ 14.1 million and $ 15.0 million as of June 30, 2026 and December 31, 2025 , respectively.

As of June 30, 2026 , there were three companies accounted for under the equity method.

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

As of June 30, 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 and six months ended June 30, 2026 .

There have been no transfers between fair value measurements levels during the three and six months ended June 30, 2026 .

Items Measured at Fair Value on a Nonrecurring Basis

1 unchanged sentence

These assets include investments in privately-held companies accounted for by the equity 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.

We did not record any other-than-temporary impairment charges for these investments during the three and six months ended June 30, 2026 and 2025 , respectively.

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

Raw materials

$ 31,979 $ 24,105

Work in process

60,468 53,665

Finished goods

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.

$ 96,322 $ 81,651

As of June 30, 2026 and December 31, 2025 , carrying values of inventories were net of inventory reserves o f $ 32.0 m illion and $ 28.4 million, respectively, for excess and obsolete inventory and $ 16,000 an d $ 180,000 , respectively, for lower of cost or net realizable value reserves.

Property, Plant and Equipment, Net

15 unchanged sentences

$ 174,924 $ 161,860

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 June 30, 2026 , the balance of construction in progress wa s $ 34.0 m illion, of whic h $ 20.6 m illion was related to our buildings in our new Dingxing and Kazuo locatio ns, $ 1.4 m illi on was for manufacturing equipment purchases not yet placed in service and $ 12.0 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.

30 unchanged sentences

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

In September 2022, our consolidated subsidiary, ChaoYang LiMei completed the sale of land and its attached buildings to our equity investment entity, ChaoYang KaiMei, for a total consideration of $ 1.5 million.

In September 2022, our consolidated subsidiary, ChaoYang LiMei completed the sale of land and its attached buildings to our equity investment entity, ChaoYang KaiMei Quartz Co., Ltd.

("ChaoYang KaiMei"), for a total consideration of $ 1.5 million.

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

1 unchanged sentence

This policy applies to all of our employees, directors, and our consolidated subsidiaries.

Our executive officers retain board seats on the board of directors of the companies in which we have invested in our PRC joint ventures.

See Note 7 for further details.

Our executive officers retain board seats on the board of directors of the companies in which we have invested in our PRC joint ventures (see Note 7 ).

Investments in Privately-Held Raw Material Companies

1 unchanged sentence

These companies form part of our overall supply chain strategy.

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

As of June 30, 2026 , the investments are summarized below (in thousands):

Investment Balance as of

Percentage [*]

Nanjing JinMei Gallium Co., Ltd.

17 unchanged sentences

* 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.

** In preparation for Tongmei’s application for a listing of shares in an IPO on the STAR Market, in late December 2020 we reorganized our entity structures in China.

JinMei and BoYu and their subsidiaries, previously organized under AXT, Inc., 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.

In 2020, the Investors transferred approximately $ 48.1 million of new capital to Tongmei.

An additional investment of approximately $ 1.5 million of new capital was funded in early 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 March 31, 2026 , Tongmei’s noncontrolling interests and redeemable noncontrolling interests totaled approximately 14.5 %.

** As of June 30, 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.

4 unchanged sentences

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 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.

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 $ 14.1 million and $ 15.0 million as of June 30, 2026 and December 31, 2025 , respectively.

As of June 30, 2026 , our ownership interests in ChaoYang KaiMei, Beijing JiYa Semiconductor Material Co., Ltd.

("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:

3 unchanged sentences

we do not have controlling financial interest in, do not maintain operational or management control of, do not control the board of directors of, and are not required to provide additional investment or financial support to any of these companies.

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

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

Additionally, in both April 2023 and November 2023, JiYa distributed dividends to us, totaling $ 2.0 million and $ 0.5 million, respectively.

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

In April 2025, we received a $ 0.9 million dividend from JiYa.

In May 2026, we received a dividend of $ 1.5 million from Xiaoyi XingAn and $ 0.5 million from JiYa.

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

1 unchanged sentence

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 months ended March 31, 2026 and 2025 :

The equity investment entities had the following summarized statements of operations information (in thousands) for the three and six months ended June 30, 2026 and 2025 :

Three Months Ended

Six Months Ended

$ 10,460 $ 7,064 $ 19,634 $ 15,722

2 unchanged sentences

$ 1,709 $ 1,010 $ 3,109 $ 2,292

Net income (loss)

$ 1,429 $ ( 197 ) $ 2,676 $ 774

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 .

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 a loss of $ 0.2 million, respectively, for the three months ended June 30, 2026 and 2025 .

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 $ 0.8 million and $ 0.2 million, respectively, for the six months ended June 30, 2026 and 2025 .

Stockholders ’ Equity

1 unchanged sentence

(in thousands)

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

The changes in stockholders’ equity by component for the three and six months ended June 30, 2026 are as follows:

Comprehensive

14 unchanged sentences

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

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:

Common stock options exercised

— — 489 — — 489 — 489

Stock-based compensation

— — 762 — — 762 — 762

Issuance of common stock, net of issuance costs of $ 32,417

— 10 600,073 — — 600,083 — 600,083

— — — 11,128 — 11,128 1,093 12,221

Other comprehensive loss

— — — — ( 62 ) ( 62 ) 170 108

Balance as of June 30, 2026

3,532 66 943,758 ( 55,416 ) ( 4,666 ) 887,274 24,839 912,113

Net income and other comprehensive income attributable to redeemable noncontrolling interests were $ 808,000 and $ 172,000 , respectively, for the three months ended June 30, 2026 , and $ 795,000 and $ 316,000 , respectively, for the six months ended June 30, 2026 and are not shown in the table above.

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

Comprehensive

5 unchanged sentences

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

Noncontrolling interest portion of Tongmei stock-based compensation

— 1 ( 13 ) — — ( 12 ) 6 ( 6 )

Stock-based compensation

7 unchanged sentences

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

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-based compensation

— — 607 — — 607 — 607

Tongmei stock-based compensation

— — 22 — — 22 2 24

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

Other comprehensive income

— — — — 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

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

There were no reclassification adjustments from accumulated other comprehensive income (loss) for the three and six months ended June 30, 2026 and 2025 .

Authorized Common Stock

Pursuant to approval by a majority of our stockholders, on June 4, 2026, we filed a certificate of amendment (the “Amendment”) to our Restated Certificate of Incorporation, as amended (the “Restated Certificate of Incorporation”) with the Secretary of State of the State of Delaware to increase the number of authorized shares of common stock of the Company from 70,000,000 to 120,000,000 , effective upon filing.

The Amendment did not have any effect on the par value of our common stock.

2026 Secondary Public Offering

On April 21, 2026, the Company 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, the Company 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.

In connection with the public offering, the Company issued a total of 9,844,357 shares of common stock for total gross proceeds of approximately $ 632.5 million, before deducting the underwriting discounts and commissions and other offering expenses.

Stock Repurchase Program

3 unchanged sentences

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.

During the three and six months ended June 30, 2026 , we did not repurchase any shares under the approved stock repurchase program.

As of June 30, 2026 , approxim ately $ 2.7 mi llion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

Series A Preferred Stock

By the terms of the Series A preferred stock, so long as any shares of Series A preferred stock are outstanding, neither the Company nor any subsidiary of the Company shall redeem, repurchase or otherwise acquire any shares of common stock, unless all accrued dividends on the Series A preferred stock have been paid.

1 unchanged sentence

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 March 31, 2026 and 2025 , we did not repurchase any of our outstanding common stock.

In the quarter ended June 30, 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.

22 unchanged sentences

Three Months Ended

Six Months Ended

Cost of revenue

$ 65 $ 47 $ 130 $ 110

Selling, general and administrative

533 476 1,336 949

Research and development

Net effect on net loss

164 110 331 220

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.

Net effect on net income (loss)

$ 762 $ 633 $ 1,797 $ 1,279

We did not capitalize any stock-based compensation to inventory as of June 30, 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 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):

There were no options granted in the three and six months ended June 30, 2026 and 2025 .

The following table summarizes the stock option transactions during the six months ended June 30, 2026 (in thousands, except per share data):

Stock Options

2 unchanged sentences

Canceled and expired

Balance as of March 31, 2026

Balance as of June 30, 2026

468 $ 5.30 2.59 $ 31,254

Options exercisable as of March 31, 2026

Options exercisable as of June 30, 2026

468 $ 5.30 2.59 $ 31,254

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.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, based on our closing price of $ 72.08 on June 30, 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 three months ended March 31, 2026 is presented below (in thousands, except per share data):

A summary of activity related to restricted stock awards for the six months ended June 30, 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 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.

Non-vested as of June 30, 2026

As of June 30, 2026 , the unamortized compensation costs related to unvested restricted stock awards was approximate ly $ 9.4 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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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 %.

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):

A summary of the status of our unvested at-risk, performance shares as of June 30, 2026 is presented below (in thousands, except per share data):

Non-vested as of January 1, 2026

( 73 ) $ 2.23

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

Non-vested as of June 30, 2026

As of June 30, 2026 , there w as $ 0.3 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 1.2 yea rs.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted-average number of common shares outstanding during the periods less shares of common stock subject to repurchase and non-vested stock awards.

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Three Months Ended

Net loss attributable to AXT, Inc.

Six Months Ended

Net income (loss) attributable to AXT, Inc.

$ 11,128 $ ( 7,008 ) $ 9,508 $ ( 15,806 )

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( 44 ) ( 44 ) ( 88 ) ( 88 )

Net loss available to common stockholders

Net income (loss) available to common stockholders

$ 11,084 $ ( 7,052 ) $ 9,420 $ ( 15,894 )

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

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

61,227 43,710 57,274 43,630

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Restricted stock awards

1,750 — 1,813 —

Denominator for dilutive net loss per common shares

63,474 43,710 59,642 43,630

Net loss attributable to AXT, Inc.

Net income (loss) attributable to AXT, Inc.

per common share:

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$ 0.17 $ ( 0.16 ) $ 0.16 $ ( 0.36 )

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

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

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.

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

— 1,175 — 1,175

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

1 2,289 3 2,289

The 883,000 shares of $ 0.001 par value Series A preferred stock issued and outstanding as of June 30, 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.

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Three Months Ended

Six Months Ended

Product Type:

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10,026 6,682 17,669 14,956

$ 47,589 $ 17,974 $ 74,513 $ 37,330

Geographical Information

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Three Months Ended

Six Months Ended

Geographical region:

$ 30,841 $ 14,492 $ 47,406 $ 27,918

2,483 530 3,182 1,751

1,462 704 3,008 1,422

Asia Pacific (excluding China, Taiwan and Japan)

3,489 427 5,672 1,208

Europe (primarily Germany)

9,153 1,597 14,877 3,698

North America (primarily the United States)

161 224 368 1,333

$ 47,589 $ 17,974 $ 74,513 $ 37,330

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.

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Significant Customers

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.

No customer represented 10% of our revenue for the three months ended June 30, 2026 and one customer represented 11 % of our revenue for the three months ended June 30, 2025 .

Our top five customers, although not the same five customers for each period, represented 30 % and 32 % of our revenue for the three months ended June 30, 2026 and 2025 , respectively.

No customers represented 10% of our revenue for six months ended June 30, 2026 and one customer represented 10 % of our revenue for six months ended June 30, 2025 .

Our top five customers, although not the same five customers for each period, represented 31 % and 29 % of our revenue for six months ended June 30, 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 .

No customer accounted for more than 10% of our accounts receivable balance as of June 30, 2026 and one customer accounted for more than 10% of our accounts receivable balance December 31, 2025 .

Commitments and Contingencies

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

The following table reflects the change in our warranty accrual which is included in “Accrued liabilities” in the condensed consolidated balance sheets, during the three and six months ended June 30, 2026 and 2025 (in thousands):

Three Months Ended

Six Months Ended

Beginning accrued product warranty

$ 439 $ 403 $ 411 $ 451

Accruals for warranties issued

84 80 133 101

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

( 70 ) 55 ( 32 ) 79

Cost of warranty repair

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Ending accrued product warranty

$ 380 $ 435 $ 380 $ 435

Contractual Obligations

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

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.

As of June 30, 2026 , w e do not hav e any outstanding purchase orders that will incur a penalty if cancelled by the Company.

Legal Proceedings

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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 asserts a putative class period from March 24, 2021 to 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.

On May 28, 2025, the Court granted defendants’ motion to dismiss with leave to amend.

Plaintiff filed his second amended complaint on June 27, 2025.

Defendants responded with a motion to dismiss the second amended complaint on July 11, 2025.

The Court granted defendants’ motion to dismiss plaintiff’s second amended complaint on July 7, 2026 with leave to amend.

On August 4, 2026, the plaintiff filed his third amended complaint.

On August 22, 2024, a derivative lawsuit was filed in the Northern District of California by an alleged shareholder against Morris S.

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The Court entered judgment on April 14, 2025.

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

On May 13, 2025, the plaintiff appealed to the United States Court of Appeals for the Ninth Circuit.

Plaintiff-Appellant’s appeal is fully briefed.

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.

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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.

Other income, net for the three months ended June 30, 2026 and 2025 , includes a grant of $ 0.1 million and $ 0.2 million, respectively, from government agencies as awards for technological innovation and job creation.

Other income (expense), net for the six months ended June 30, 2026 and 2025 , includes a grant of $ 0.3 million and $ 0.5 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 $ 217,000 and a gain of $ 45,000 for the three months ended June 30, 2026 and 2025 , respectively.

We incurred a foreign currency transaction exchange loss of $ 391,000 and a gain of $ 86,000 for the six months ended June 30, 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.

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

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.

Income tax expense for the three and six months ended June 30, 2026 includes no interest and penalties.

As of June 30, 2026 , we have no accrued interest and penalties related to uncertain tax positions.

We file income tax returns in the U.S.

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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 months ended March 31, 2026 was mostly related to our wholly owned China subsidiaries and our partially owned subsidiaries in China.

Provision for income taxes for the three and six months ended June 30, 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.

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The majority of our contracts have a single performance obligation to transfer products and are short term in nature, usually less than six months;

however, we have recently entered into several long-term arrangements with customers.

Our revenue is measured based on the consideration specified in the contract with each customer in exchange for transferring products that are generally based upon a negotiated formula, list or fixed price.

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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 March 31, 2026 .

We do not have any material contract assets as of June 30, 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 March 31, 2026 and December 31, 2025 (in thousands):

As of June 30, 2026, the aggregate transaction price allocated to the remaining performance obligations under the long-term supply agreements was approximately $ 98.5 million, excluding applicable taxes.

We expect to recognize this amount as revenue through the first half of 2029 as the related products are delivered and control transfers to customers.

The agreements require aggregate contractual advance payments of approximately $ 47.7 million, of which approximately $ 12.7 million had been received as of June 30, 2026 .

The following table reflects the current portion of contract liabilities, which is included in “Accrued liabilities” on the condensed consolidated balance sheets, as of June 30, 2026 and December 31, 2025 (in thousands):

Contract liabilities

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 .

$ 12,078 $ 103

During the three and six months ended June 30, 2026 , the Company recogn ized $ 1,000 and $ 29,000 , respectively, of rev enue that was included in the contract balances as of December 31, 2025 .

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

As of June 30, 2026 , approximately $ 1.9 million of contract liabilities was classified as long-term and included in "Other long-term liabilities" on the condensed consolidated balance sheets.

There were no long-term contract liabilities as of December 31, 2025 .

Disaggregated Revenue

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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 %.

As of June 30, 2026 , the outstanding balance of short-term loans was $ 79.0 million, with interest rates ranging from 2.0 % to 3.8 %.

Of this amount, $ 49.2 million was unsecured, $ 21.8 million was secured by the time deposit of the Company, and $ 8.0 million was secured by real estate properties owned by certain subsidiaries.

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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 June 30, 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.

Upon the maturity of the December 2023 arrangement, the subsidiary entered into another financing arrangement in June 2026 and obtained financing in the form of notes receivable with a face value of approximately $ 1.9 million.

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.

The February 2026 and June 2026 arrangements each have a term of 36 months 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 June 30, 2026 , $ 1.3 million is included in “Other long-term liabilities” and $ 3.3 million 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):

As of June 30, 2026 , $ 0.4 million is included in “Other long-term liabilities” and $ 0.2 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In April and June 2026, one of our consolidated subsidiaries entered into unsecured bank loan agreements with terms of 19 months and 14 months, respectively, and received aggregate proceeds of approximately $ 2.9 million at an interest rate of 2.5 %.

As of June 30, 2026 , $ 2.9 million is included in “Other long-term liabilities” and $ 0.06 million is included in “Short-term loans” in our condensed consolidated balance sheets.

In April and May 2026, one of our consolidated subsidiaries entered into two bank loan agreements, each with a term of 24 months and secured by the time deposit of the Company, and received aggregate proceeds of approximately $ 7.1 million at an interest rate of 2.4 %.

As of June 30, 2026 , $ 6.4 million is included in “Other long-term liabilities” and $ 0.7 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of June 30, 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 6 months)

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 .

In summary, short-term loans of $ 84.2 million included under “Short-term loans” in our condensed consolidated balance sheet at June 30, 2026 , consisted of $ 79.0 million of short-term bank loans and $ 5.2 million of the current portion of long-term debt.

Long-term loan of $ 15.5 million included under “Other long-term liabilities” in our condensed consolidated balance sheet at June 30, 2026 .

These borrowings are subject to customary lending arrangements.

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

As of June 30, 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 March 31, 2026 , the maturities of our operating lease liabilities (excluding short-term leases) are as follows (in thousands):

As of June 30, 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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Supplemental cash flow information related to leases where we are the lessee is as follows (in thousands):

Three Months Ended

Six Months Ended

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

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Three Months Ended

Six Months Ended

Operating lease

$ 172 $ 161 $ 338 $ 321

Short-term lease expense

$ 206 $ 195 $ 401 $ 404

Redeemable Noncontrolling Interests

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On August 1, 2022, the CSRC accepted for review Tongmei’s IPO application.

The STAR Market IPO remains subject to review and approval by the CSRC and other authorities.

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process.

Subject to review and approval by the CSRC and other authorities, Tongmei hopes to accomplish this goal in the coming months.

The listing of Tongmei on the STAR Market will not change the status of AXT as a U.S.

public company.

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):

On July 8, 2026, the STAR Market accepted Tongmei's withdrawal of its IPO application.

The withdrawal gave rise to a redemption right:

each Investor has the right, but not the obligation, to require us to redeem its investment, and we have the right, but not the obligation, to redeem each Investor’s investment, in each case for a price equal to the original amount invested, without interest or any other return.

Because the redemption price is fixed in RMB, the U.S.

dollar amount payable will vary with the RMB/USD exchange rate.

We are in discussions with each Investor to determine whether it wishes to continue its investment as Tongmei advances toward an application for a Hong Kong Stock Exchange listing, or to have its investment redeemed in whole or in part.

We have sufficient funds to redeem the Investors' investments in full should full redemption be required.

The components of the change in redeemable noncontrolling interests for the six months ended June 30, 2026 are presented in the following table (in thousands):

Balance as of January 1, 2026

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Stock-based compensation attributable to redeemable noncontrolling interests

Net loss attributable to redeemable noncontrolling interests

Net income attributable to redeemable noncontrolling interests

Effect of foreign currency translation on redeemable noncontrolling interests

Effect of foreign currency translation attributable to redeemable noncontrolling interests

Balance as of March 31, 2026

Balance as of June 30, 2026

Recent Accounting Pronouncements

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

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

Adoption had an immaterial effect on our condensed consolidated financial statements.

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

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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.

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

In May 2026, FASB issued ASU 2026 - 02, Environmental Credits and Environmental Credit Obligations (Topic 818 ) , which provides guidance on the recognition, measurement, presentation and disclosure of environmental credits and related obligations.

The Update is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years, with early adoption permitted.

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

Subsequent Events

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.

On July 8, 2026, the STAR Market accepted Tongmei’s withdrawal of its IPO application, triggering redemption rights under the applicable Capital Investment Agreements.

If all investors exercise their redemption rights in full, the aggregate redemption amount would be approximately $ 49 million.

The withdrawal may also result in the recognition of some or all of the deferred offering expenses associated with the STAR Market listing application and IPO.

On July 23, 2026, the Company entered into an agreement with Beijing Bomeilian Special Ceramics Co., Ltd., a related party controlled by Dr.

He, the general manager of BoYu, to acquire approximately 0.58 % of Tongmei's outstanding shares for approximately $ 6 million.

The transaction had not closed as of the date these financial statements were issued.

On July 26, 2026, we entered into a six -year capacity reservation agreement with a customer for the supply of InP wafer substrates.

In consideration for the reserved product capacity, the customer agreed to pay us two deposits of $ 43.5 million each, which will be applied as shipment credits toward future purchases;

the initial deposit is due within 30 business days after entry into the agreement, and the timing and terms of the second deposit will be determined during 2028.

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 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.

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, revenues from long-term supply agreements with customers, 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 relating to certain redemption rights held by private equity funds in China of their investments in Tongmei, and Company’s efforts in assessment of strategic alternatives and opportunities are forward-looking statements.

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.

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

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.

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, revenues from long-term supply agreements with customers, Tongmei's intended IPO application on the Hong Kong Stock Exchange, the administrative challenges in satisfying the requirements of various government agencies in China in connection with the investments in Tongmei and geopolitical tensions between China and the United States.

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

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Any loss of sales could have a material adverse effect on our revenue, our results of operations and our financial condition.

On November 16, 2020, we announced a strategic initiative to access China’s capital markets by beginning a process to list shares of Tongmei in an initial public offering (the “IPO”) on the STAR Market, an exchange intended to support innovative companies in China.

We formed and founded Tongmei in 1998 and believe Tongmei has grown into a company that will be an attractive offering on the STAR Market.

On November 16, 2020, we announced a strategic initiative to access China’s capital markets by beginning a process to list shares of Tongmei in an initial public offering (the “IPO”) on the Shanghai Stock Exchange STAR Market (the “STAR Market”), an exchange intended to support innovative companies in China.

We formed and founded Tongmei in 1998 and believed at that time that Tongmei had grown into a company that would be an attractive offering on the STAR Market.

To qualify for a STAR Market listing, the first major step in the process was to engage private equity firms in China (“Investors”) to invest funds in Tongmei.

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On August 1, 2022, the CSRC accepted for review Tongmei’s IPO application.

The STAR Market IPO remains subject to review and approval by the CSRC and other authorities.

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process.

Subject to review and approval by the CSRC and other authorities, Tongmei hopes to accomplish this goal in the coming months.

The listing of Tongmei on the STAR Market will not change the status of AXT as a U.S.

public company.

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

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increased the number of customers and employees attributable to Tongmei as well as increased Tongmei’s consolidated revenue.

On July 8, 2026, the STAR Market accepted Tongmei's withdrawal of its IPO application.

The Company intends to transfer its dedicated resources and efforts towards a listing on the Hong Kong Stock Exchange where its listing application will emphasize its updated business plan focusing on the development of the Company's InP business to address the growing demand for InP substrates used in high-speed optical data transmission and artificial intelligence data center applications.

Tongmei’s STAR Market listing application emphasized Tongmei’s GaAs” semiconductor wafer substrates and other products for micro-LEDs.

Given the increase in demand for its InP wafer substrates used for high-speed optical data transmission in data centers employing artificial intelligence, the Company believes that the Hong Kong Stock Exchange is an attractive market to list Tongmei’s shares permitting a broader potential base of institutional and retail investors in its anticipated IPO.

Tongmei’s STAR Market listing application withdrawal gives rise to a redemption right:

each Investor has the right, but not the obligation, to require the Company to redeem its investment, and the Company has the right, but not the obligation, to redeem each Investor’s investment, in each case for a price equal to the original amount invested, without interest or any other return.

Because the redemption price is fixed in RMB, the U.S.

dollar amount payable will vary with the RMB/USD exchange rate.

Tongmei and the Company are in discussions with each Investor to determine whether it wishes to continue its investment as Tongmei advances toward an application for a Hong Kong Stock Exchange listing, or to have its investment redeemed in whole or in part.

The Company has sufficient funds to redeem the Investors' investments in full should full redemption be required.

The withdrawal may also result in the recognition of some or all of the deferred offering expenses associated with the STAR Market listing application and IPO.

We are neither a PRC operating company nor do we conduct our operations in China through the use of variable interest entities (“VIEs”).

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 March 31, 2026:

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

The fluidity of the export permit requirements presents an ongoing lack of certainty 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.

will eventually be granted.

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

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

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 six months ended June 30, 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 $2.0 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 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.

For the six months ended June 30, 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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We derive a significant portion of our revenue from international sales, and our ability to sustain and increase our international sales involves significant risks.

The terms of the private equity raised in China as a first step toward an IPO on the STAR Market grant each Investor a right of redemption if Tongmei fails to achieve its IPO.

The terms of the private equity raised in China for the IPO on the STAR Market granted each Investor a right of redemption if Tongmei fails to achieve its IPO.

On July 8, 2026, the STAR Market accepted Tongmei's withdrawal of its IPO application.

In the event, all the Investors exercise their full redemption rights this would result in returning the $49 million cash that we raised from these Investors.

We are subject to foreign exchange gains and losses that may materially impact our statement of operations.

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The majority of our contracts have a single performance obligation to transfer products and are short term in nature, usually less than six months;

however, we have recently entered into several long-term arrangements with customers.

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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 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.

As of June 30, 2026 and December 31, 2025, our accounts receivable, net balance w as $36.7 million and $26.8 million, respectively, which was net of an allowance o f $230,000 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 March 31, 2026 and December 31, 2025, accrued product warranties total ed $439,000 a nd $411,000, respectively.

As of June 30, 2026 and December 31, 2025, accrued product warranties total e d $380,000 a nd $411,000, respectively.

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

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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 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.

As of June 30, 2026 and December 31, 2025, we had an inventory reserve of $ 32.0 milli on and $28.4 million, respectively, for excess and obsolete inventory a nd $ 16,000 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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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 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.

As of June 30, 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 and six months ended June 30, 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 March 31, 2026 and December 31, 2025.

We had no “Assets held for sale” or any impairment of long-lived assets in the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025.

Stock-based Compensation

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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.

The fluidity of the export permit requirements presents an ongoing lack of certainty 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.

will eventually be granted.

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

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Risk Factors – Risks Related to International Aspects of Our Business”.

Corporate Updates

On July 23, 2026 (the “Effective Date”), we entered into a Share Transfer Agreement (“Transfer Agreement”) with a shareholder of Tongmei, who owns approximately 46,074,057 of the outstanding shares of Tongmei, representing approximately 5% of the outstanding shares of Tongmei, to purchase 5,135,475 shares of Tongmei (“Tongmei Shares”) at a price of RMB 40,621,600 (approximately $6.0 million) (the “Purchase Price”).

As a result of the acquisition of the Tongmei Shares, we will own approximately 86.09% of Tongmei.

On July 26, 2026, the Board adopted and approved an amendment (the “Amendment”) to our Second Amended and Restated Bylaws, effective immediately, pursuant to which Section 1.4 thereof was amended to reduce the quorum required for meetings of shareholders from a majority to thirty-three and one-third percent of all shares of stock entitled to vote at the meeting.

Discontinuation of IPO Application on STAR Market

On July 8, 2026, the STAR Market accepted Tongmei's withdrawal of its IPO application.

We intend to transfer our dedicated resources and efforts towards a listing on the Hong Kong Stock Exchange where Tongmei’s listing application will emphasize its updated business plan focusing on the development of its InP business to address the growing demand for InP substrates used in high-speed optical data transmission and artificial intelligence data center applications.

Given the increase in demand for its InP wafer substrates used for high-speed optical data transmission in data centers employing artificial intelligence, we believe that the Hong Kong Stock Exchange is an attractive market to list Tongmei’s shares permitting a broader potential base of institutional and retail investors in its anticipated IPO.

In connection with the redemption right of the Investors resulting from the withdrawal of the IPO application, we are in discussions with each Investor to determine whether it wishes to continue its investment as Tongmei advances toward an application for a Hong Kong Stock Exchange listing, or to have its investment redeemed in whole or in part.

Based on our cash position as of the date of this Form 10-Q, we believe we have sufficient funds to redeem the Investors' investments in full should full redemption be required.

Board of Director Changes

On July 11, 2025, Ms.

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

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

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.

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.

On June 17, 2026, the Board increased the number of directors on the Board from four to five.

Immediately thereafter, the Board elected Ms.

Tracy Liu to the Board as a Class II director and an independent director, effective immediately.

Liu’s term will expire at our 2028 annual meeting of stockholders.

Liu was also appointed to serve on the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.

On July 16, 2026, the Board increased the number of directors on the Board from five to six.

Immediately thereafter, the Board elected Mr.

Jia-Bin Duh to the Board as a Class III director and an independent director, effective immediately.

Duh’s term will expire at our 2028 annual meeting of stockholders.

Duh was also appointed to serve on the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.

Recent Business Updates

On June 11, 2026, Tongmei entered into a Long-term Supply Agreement (the “Casela Agreement”) with Nanjing Casela Technologies Corporation, Ltd.

(“Casela”) pursuant to which Tongmei agreed to reserve production capacity and raw-material allocation for, and grant supply priority to, Casela in exchange for Casela’s binding commitment to purchase a fixed aggregate quantity of InP wafer substrates from Tongmei during the period from January 1, 2027 through December 31, 2027.

During the year 2027, Casela committed to purchase an agreed upon quantity of InP substrate wafers for a total price of RMB 173,000,000 (approximately $25.4 million), to be delivered on a monthly schedule.

Casela is required to pay 50% of the total purchase price as a prepayment within 15 business days after entry into the Casela Agreement, with the remaining 50% due on or before December 31, 2026.

Casela is required to purchase at least 80% of the fixed aggregate quantity of InP wafer substrates and if purchases fall below 80%, Casela must pay a cancellation fee for the unpurchased quantity.

To the extent Casela’s demand during the term exceeds the committed quantity, Tongmei has agreed, subject to available capacity and on terms no less favorable than those offered to similarly situated customers, to prioritize Casela’s excess demand.

Order cancellation, Casela's failure to take possession of goods made available for delivery, payment delinquency exceeding 30 days or failure to reach the 80% purchase threshold each constitute a fundamental breach, upon which Tongmei may, in its sole discretion, terminate the Agreement and retain all amounts previously paid by Casela.

On June 26, 2026, we entered into a Master Development and Supply Agreement (the “Coherent Agreement”) with Coherent Corp, a Pennsylvania Corporation (“Coherent”), for the development and supply of certain agreed-upon specifications for 6-inch InP wafer substrates (the “Coherent Products”) for an initial term of three (3) years.

We agreed to increase the manufacturing capacity of the Products at our Beijing, China facility in 2026 through 2028 and committed to the delivery of an agreed upon product capacity to Coherent (the “Capacity Commitment”) for a prepayment of $22,288,500 (the “Prepayment”), The Prepayment is refundable to Coherent at its sole option if the Prepayment has not been fully applied upon the expiration or termination of the Coherent Agreement.

However, if Coherent fails to meet its minimum order quantity requirement, the remaining unused portion of the Prepayment will be nonrefundable and we will have the right to terminate the Coherent Agreement.

Subject to any mutually agreed changes, Coherent has the right to terminate the Coherent Agreement if we fail to meet the Capacity Commitment for more than six (6) successive calendar months, and Coherent will be entitled to a refund of the unused Prepayment.

To the extent there is additional capacity beyond the committed quantity, we have agreed to offer such additional capacity at the same terms to Coherent.

On July 26, 2026, we entered into a Capacity Reservation Agreement (“Lumentum Agreement”) with Lumentum Operations LLC, a Delaware limited liability company (collectively with its affiliates, “Lumentum”) for the supply and capacity reservation of InP wafer substrates (the “Lumentum Products”).

We agreed to reserve a minimum annual commitment of the Lumentum Products by Lumentum (the “Product Capacity”) for a six (6) year period and to support any additional capacity that may be required, subject to extension of the term for additional one (1) year periods.

In consideration for the reservation of the Product Capacity, Lumentum agreed to pay us (i) an initial deposit of $43,500,000, due within thirty (30) business days after entry into the Lumentum Agreement, and (ii) a second deposit of $43,500,000, with the timing and terms surrounding payment to be subsequently determined during calendar year 2028.

The deposits will be applied as shipment credits towards the purchase of the Lumentum Products, until such deposit is exhausted.

In the event that Lumentum’s actual purchase quantity during any calendar year falls below the committed Product Capacity for such calendar year (the “Annual Purchase Commitment”), subject to certain exceptions under the Lumentum Agreement, Lumentum will be responsible for the shortfall between the Annual Purchase Commitment and the quantity actually purchased.

In addition, failure to deliver the minimum annual Product Capacity by us constitutes a material breach, and we will be required to refund to Lumentum the portion of deposit, as applicable, that has not previously been applied as shipment credits.

However, upon termination for convenience or changes in demand, we will retain any unallocated deposit amounts.

Results of Operations

Three Months Ended

Six Months Ended

Product Type:

($ in thousands)

Raw materials and other

Total revenue

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.

Re venue increase d $29.6 million, or 164.8%, to $47.6 million for the three months ended June 30, 2026 from $18.0 million for the three months ended June 30, 2025 .

The substrate revenue increase for the three months ended June 30, 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.

Ra w materials s ales increased $3.3 million, or 50.0%, to $10.0 million for the three months ended June 30, 2026 as compared to the same period in 2025.

The increase in ra w materials revenue for the three months ended June 30, 2026 as compared to the same period in 2025 was primarily the result of an increase in sales of refined gallium and pBN crucibles resulting from stronger market demand.

Re venue increased $37.2 million, or 99.6%, to $74.5 milli on for the six months ended June 30, 2026 from $37.3 million for the six months ended June 30, 2025 .

The substrate revenue increase for the six months ended June 30, 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 sales increased $2.7 million, or 18.1%, to $17.7 million for the six months ended June 30, 2026 as compared to the same p eriod in 2025.

The increase i n ra w materials revenue for the six months ended June 30, 2026 as compared to the same period in 2025 was primarily th e result of an increase in sales of refined gallium and pBN crucibles resulting from stronger market demand.

Revenue by Geographic Region

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Total revenue

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.

Revenue in China increased $16.3 mi llion for the three months ended June 30, 2026 , primarily due to higher demand for our InP wafer substrates, raw gallium sold by one of our consolidated subsidiaries and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by lower demand for our Ge and GaAs wafer substrates.

Revenue in Taiwan increased $2.0 million, primarily due to an increase in export approvals granted by the China government for our InP wafer substrates, partially offset by lower demand for our GaAs wafer substrates.

Revenue in Japan increased $0.8 million, primarily due to additional export approvals granted by the China government for our InP wafer substrates, partially offset by lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Revenue in Asia Pac ifi c increased $3.1 million, primarily due to higher demand for our InP wafer substrates, partially offset by lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

R evenue in Euro pe increased $7.6 million, primarily due to additional export approvals granted by the China government for our InP and GaAs wafer substrates.

Revenue in North America decreased $63,000 , primarily due to the impact of China export restrictions on our InP and GaAs wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Six Months Ended

($ 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 increased $19.5 million for the six months ended June 30, 2026, primarily due to higher demand for our InP wafer substrates, raw gallium sold by one of our consolidated subsidiaries and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by lower demand for our Ge and GaAs wafer substrates .

Revenue in Taiwan increased $1.4 million, primarily due to an increase in export approvals granted by the China government for our InP wafer substrates, partially offset by lower demand for our GaAs wafer substrates .

Revenue in Japan increased $1.6 million, primarily due to additional export approvals granted by the China government for our InP and GaAs wafer substrates, partially offset by lower demand for pBN crucibles sold by one of our consolidated subsidiaries .

Revenue in Asia Pacific increased $4.5 million, primarily due to higher demand for our InP wafer substrates, partially offset by lower demand for our GaAs wafer substrates .

Revenue in Europe increased $11.2 million, primarily due to additional export approvals granted by the China government for our InP and GaAs wafer substrates and pBN crucibles sold by one of our consolidated subsidiaries, partially offset by lower demand for our Ge wafer substrates .

Revenue in North America decreased $1.0 million, primar ily due to the impact of China export restrictions on our InP and GaAs wafer substrates and lower demand for pBN crucibles sold by one of our consolidated subsidiaries.

Three Months Ended

Six Months Ended

($ in thousands)

Gross profit (loss)

($ in thousands)

Gross Profit %

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.

Gro s s profit increased $19.9 million, or 1391.0%, to a profit of $21.4 million for the three months ended June 30, 2026 from a profit of $1.4 million for the three months ended June 30, 2025.

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

Gro ss prof it increased $29.2 million, or 15183.3%, to a profit of $29.3 million for the six months ended June 30, 2026 from a profit of $0.2 million for the six months ended June 30, 2025.

The increase in gr oss 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

Six Months Ended

($ in thousands)

Selling, general and administrative expenses

% of total revenue

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.

Selling, general and administrative expe ns es increased $1.6 million, or 29.0%, to $7.3 million for the three months ended June 30, 2026 from $5.7 million for the three months ended June 30, 2025.

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

Selling, general and administrative expe ns es increased $2.3 million, or 19.7%, to $13.8 million for the six months ended June 30, 2026 from $11.6 million for the six months ended June 30, 2025.

T h e higher sell ing, general and administrative expenses were primarily from an increase in compensation related costs, legal expenses, travel related costs, license, tax and registration fees and outside commissions, partially offset by lower professional services costs.

Research and Development

Three Months Ended

Six Months Ended

($ in thousands)

Research and development

% of total revenue

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

Research and development exp ense s increased $1.1 million, or 44.6%, to $3.7 mi llion fo r the three months ended June 30, 2026 from $2.5 million for the three months ended June 30, 2025.

Th e increase in r esearch and development expenses for the three months ended June 30, 2026 was primarily d ue to an increase in use of certain materials for new product development and compensation related costs.

Research and development exp ense s increased $1.0 million, or 18.1%, to $6.7 mil lion fo r the six months ended June 30, 2026 from $5.6 million for the six months ended June 30, 2025.

The increase in r esearch and development expenses for the six months ended June 30, 2026 was primarily d ue to an increase in use of certain materials for new product development, compensation related costs and utilities .

Interest Income (Expense), Net

Three Months Ended

Six Months Ended

($ in thousands)

Interest income (expense), net

% of total revenue

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

Interest income (expense) , n et increased $4.9 million to an income of $4.7 million for t he three months ended June 30, 2026 from an expense of $202,000 for the three months ended June 30, 2025.

The increase was primarily due to higher interest income resulting from the investment of proceeds from our secondary public offerings in the gross amount of approximately $100 million and $632.5 million, respectively, in December 2025 and April 2026.

Interest income (expense), net increased $5.3 million to an income of $4.8 million for the six months ended June 30, 2026 from an expense of $471,000 for the six months ended June 30, 2025 .

Equity in Income (Loss) of Unconsolidated Joint Venture Companies

Three Months Ended

Six Months Ended

($ in thousands)

Equity in income of unconsolidated joint ventures

($ in thousands)

Equity in income (loss) of unconsolidated joint ventures

% of total revenue

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

The equity in income (loss) of unconsolidated joint ventures companies was income of $0.4 million for the three months ended June 30, 2026 as compared to a loss of $0.2 million for the three months ended June 30, 2025.

T he increase in income of $0.6 million is primarily due to stronger performance in unconsolidated joint ventures.

The equity in income of unconsolidated joint ventures companies was income of $0.8 million for the six months ended June 30, 2026 as compared to income of $0.1 million for the six months ended June 30, 2025.

T h e increase in income of $0.7 million is primarily due t o stronger performance in unconsolidated joint ventures.

Other Income (Expense), Net

Three Months Ended

Six Months Ended

Other Income (Expense)

($ in thousands)

Other income, net

($ in thousands)

Other income (expense), net

% of total revenue

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.

Other incom e (expense), ne t decreased $0.5 million to a loss of $0.4 million fo r the th ree months ended June 30, 2026 from an income of $0.02 million for the three months ended June 30, 2025.

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

Other income (expense), net decreased $0.7 million to a loss of $0.4 million for the six months ended June 30, 2026 from an income of $0.4 million for the six months ended June 30, 2025 .

Other income (expense), net decreased primarily due to foreign currency exchange losses in the current period compared to foreign currency exchange gains in the prior period.

Provision for Income Taxes

Three Months Ended

Six Months Ended

($ in thousands)

Provision for income taxes

% of total revenue

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.

Provision for incom e tax es increased $1.5 million to $2.1 million for the three months ended June 30, 2026 as compared to $0.6 million for the three months ended June 30, 2025.

The tax expense recorded for the three months ended June 30, 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.

parent company.

Our estimated tax rate can vary greatly from year to year because of the change or benefit in the mix of taxable income between our U.S.

and China-based operations.

Provision for income taxes increased $1.9 million to $2.5 million for the six months ended June 30, 2026 as compared to $0.7 million for the six months ended June 30, 2025.

The tax expense recorded for the six months ended June 30, 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.

Our estimated tax rate can vary greatly from year to year because of the change or benefit in the mix of taxable income between our U.S.

and China-based operations.

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

Net (income) loss attributable to

Three Months Ended

noncontrolling interests and

Six Months Ended

noncontrolling interests and

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 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.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling inte r ests increased $2.6 million to an income of $1.9 million for the three months ended June 30, 2026, from a loss of $0.7 million for the three months ended June 30, 2025, primarily due to higher profitability from our PRC subsidiaries as sales increased.

Net (income) loss attributable to noncontrolling interests and redeemable noncontrolling inte r ests increased $3.9 million to an income of $2.0 m i llion for the six months ended June 30, 2026, from a loss of $1.9 million for the six months ended June 30, 2025, primarily due to higher profitability from our PRC subsidiaries as sales increased.

Liquidity and Capital Resources

We consider cash and short-term investments as liquid and available for use within one year in our current operations.

Short-term investments are comprised of U.S.

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

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.

As of June 30, 2026 , our principal source of liquidity was $748.8 million, which consisted of cash of $412.2 million and restricted cash of $33.1 million and investments of $303.6 million.

In the six months ended June 30, 2026 , cash and restricted cash increased by $316.9 million and investments increased by $303.6 million.

The increase in cash and restricted cash of $316.9 million in the six months ended June 30, 2026 was primarily due to net cash provided by financing activities of $629.4 million and the effect of exchange rate changes of $2.6 million, partially offset by net cash used in investing activities of $314.2 million and net cash used by operating activities of $0.9 million.

As of June 30, 2026 , we and our PRC subsidiaries held approximately $75.1 million in cash and investments in foreign bank accounts, of which $32.9 million was classified in restricted cash.

As of June 30, 2025, our principal source of liquidity was $35.1 million, which consisted of cash of $27.0 million and restricted cash of $8.1 million.

In the six months ended June 30, 2025, cash and restricted cash increased by $1.3 million.

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

As of June 30, 2025, we and our PRC subsidiaries held approximately $29.8 million in cash and investments in foreign bank accounts, of which $7.9 million was classified in restricted cash.

Net cash used in operating activities of $0.9 million for the six months ended June 30, 2026 was primarily comprised of a net change of $20.5 million in operating assets and liabilities and gain from unconsolidated joint ventures of $0.8 million, partially offset by a net i ncome before income attributable to noncontrolling interest and redeemable noncontrolling interests of $11.5 mill ion the adjustment for non-cash items of depreciation and amortization of $5.0 million, return of equity method investments as dividends of $2.0 million and stock-based compensation of $1.8 million and change in deferred tax assets of $0.1 million.

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

Net cash used in investing activities of $314.2 million for the six months ended June 30, 2026 was primarily from the purchase of available-for-sale debt securities of $305.6 million and the purchase of property, plant and equipment of $8.6 million.

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

Net cash provided by financing activities was $629.4 million for the six months ended June 30, 2026 , which consisted of proceeds from issuance of common stock and options exercised, net of issuance costs of $602.1 million, short-term loans of $44.4 million and long-term loans of $13.0 million, partially offset by repayment of short-term loans of $25.9 million and repayment of long-term loan of $4.2 million.

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

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

2 unchanged sentences

Since 2015, no shares were repurchased under this program.

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

As of June 30, 2026, approximat ely $2.7 mi llion remained available for future repurchases under this program.

Currently, we do not plan to repurchase additional shares.

4 unchanged sentences

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

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

As of June 30, 2026, the balance remained unchanged.

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

7 unchanged sentences

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

For the 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.

For the six months ended June 30, 2026 and 2025, 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 $2.0 million and $0.9 million, respectively.

For the six months ended June 30, 2026 and 2025, there were no dividends paid to minority shareholders by our PRC subsidiaries or PRC raw material joint ventures.

For the six months ended June 30, 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.

1 unchanged sentence

The cash generated from one PRC subsidiary is not used to fund another PRC subsidiary’s operations.

None of our PRC subsidiaries has faced difficulties or limitations on its ability to transfer cash between our subsidiaries.

AXT has cash management policies that dictate the amount of such funding.

As one of the first steps in the process of listing Tongmei on the STAR Market and going public, we sold approximately 7.28% of Tongmei to private equity investors for approximately $49 million in the aggregate.

Pursuant to the Capital Investment Agreements with the Investors, each Investor has the right to require AXT to redeem any or all Tongmei shares held by such Investor at the original purchase price paid by such Investor, without interest, in the event the IPO fails to pass the audit of the Shanghai Stock Exchange, is not approved by the CSRC or Tongmei cancels the IPO application.

The aggregate redemption amount is approximately $49 million.

In the normal course of business, however, our PRC subsidiaries engage in product-related transactions with one another.

None of our PRC subsidiaries has faced difficulties or limitations on their ability to transfer cash between our subsidiaries.

In connection with the Shanghai Stock Exchange process of listing Tongmei on the STAR Market and going public, we sold approximately 7.28% of Tongmei to private equity investors for approximately $49 million in the aggregate.

Tongmei submitted its IPO application to the Shanghai Stock Exchange, and it was formally accepted for review on January 10, 2022.

The Shanghai Stock Exchange approved the IPO application on July 12, 2022.

On August 1, 2022, the CSRC accepted for review Tongmei’s IPO application.

The STAR Market IPO remains subject to review and approval by the CSRC and other authorities.

The process of going public on the STAR Market includes several periods of review and, therefore, is a lengthy process.

Subject to review and approval by the CSRC and other authorities, Tongmei expects to accomplish this goal in the coming months.

The listing of Tongmei on the STAR Market will not change the status of AXT as a U.S.

public company.

On July 8, 2026, the STAR Market accepted Tongmei's withdrawal of its IPO application.

AXT and Tongmei intend to transfer their dedicated resources and efforts towards a listing on the Hong Kong Stock Exchange where its listing application will emphasize its updated business plan focusing on the development of the Company's InP business to address the growing demand for InP substrates used in high-speed optical data transmission and artificial intelligence data center applications.

Tongmei’s listing application on the STAR Market in 2021, which has been pending since that time, emphasized Tongmei’s GaAs” semiconductor wafer substrates and other products for micro-LEDs.

Pursuant to the applicable Capital Investment Agreements, Tongmei’s withdrawal of its STAR Market listing application gives rise to a redemption right:

each Investor has the right, but not the obligation, to require the Company or Tongmei to redeem its investment, and the Company or Tongmei has the right, but not the obligation, to redeem each Investor’s investment, in each case for a price equal to the original amount invested, without interest or any other return.

Because the redemption price is fixed in RMB, the U.S.

dollar amount payable will vary with the RMB/USD exchange rate.

The Company has sufficient funds to redeem the Investors' investments in full should full redemption be required.

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%.

As of June 30, 2026, the outstanding balance of short-term loans was $79.0 million, with interest rates ranging from 2.0% to 3.8%.

Of this amount, $49.2 million was unsecured, $21.8 million was secured by the time deposit of the Company, and $8.0 million was secured by real estate properties owned by certain subsidiaries.

6 unchanged sentences

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 June 30, 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.

As of June 30, 2026, $1.3 million is included in “Other long-term liabilities” and $3.3 million 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 June 30, 2026, $0.4 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 June 30, 2026, $2.9 million is included in “Other long-term liabilities” and $0.06 million is included in “Short-term loans” in our condensed consolidated balance sheets.

As of June 30, 2026, $6.4 million is included in “Other long-term liabilities” and $0.7 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.

36 unchanged sentences

Off-Balance Sheet Arrangements

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).

As of June 30, 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